One refrain we keep hearing about this financial mess, is that the institutions are too large to let fail. Soooo, why don't we break them up? Teddy Roosevelt would have resolved this long ago. Why do neither Obama nor McCain say a word about this? It seems to be getting worse. Every time a huge investment bank fails or teeters it is sold to an even larger investment bank. Doesn't anyone see a problem here? Today Wachovia was swallowed by an even larger bank. Soooo, I bet we sure as hell can’t let Wachovia fail.

Can we try to answer this without calling one another parents pond scum or their favorite party traitors?

Wow, nice. Never thought about this that way. Kind of an all your eggs in the same basket kind of thing. I wonder how much it will cost us when these next banks take a crap.

The ones who are being bought up or have failed were the greediest who ignored the primary tenant of banking, risk management. That is what a bank does, they manage risk.

There will be a few more that happen, and over time these contractions in the numbers of banks have strengthened the banking sytem, like after the
S&L failures that lead to the forming of the RTC. Lots of new laws, or old laws that were re-worked, helped to cure what ailed us back then, and make it a safer world for the consumer. This one will be painful, but we'll get through it.

Certainly interesting times to be living in.

Explain to me Dogfish about the selling of mortgage paper. At what price is a $100,000 mortgage sold, and what is the true loss? Is it what the paper would have earned over 30 years?

Looks like we are headed for the true version of Demolition Man. Soon enough everyone is going to be eating Taco Bell in Black Tie only attire and cussin at word monitors that issue tickets after every swear word just so we can wipe our butts with handfuls of paper. Don't worry about routing numbers and accounts. Everyone is going to be going to the same bank anyway. All you need is a finger print and a retinal scan to get your money. It appears that the word "Ear mark" is the culprit behind most of our present day problems. Eliminate the use of such things and we will take care of half the unthought out processes used to benefit the best friends corporate bank accounts that are so dangerously close to being barely able to cover the pay roll. The country is being run by the minority and not the intended people. Simply put, "We" gotta take the power back.

Perhaps it was because T.R. preceded FDR's doing this....

http://educationcenter2000.com/legal/HJR_192_73rdCongress.html

Which was perhaps in part the fulfillment of this....

http://wiki.monticello.org/mediawiki/index.php/Private_Banks_(Quotation)

My Grampa just had a birthday and my Dad asked him what the secret was to his longevity. He paused and said " being honest with yourself." Deep stuff for me when I rolled it over in the head for a few days. Corrolation here is the basic premise of honesty and integrity have been lost in many strings connecting to the ball of yarn we call society/government (the key holder to the gates). Our system is so corrupt from the bottom all the way to the top events like the crumbling of our economic corner stone disasterous events like such are bound to occurr. How America and its' leaders and authorities of the checks and balancing react to this B.S. is the key to stopping it. For example if the powers that be slap these corrupt organizations on the wrist get ready for more if they lock em up and take all their money that they can find then the greed based assanine theft might slow down. Another deterent is Americans getting pissed off and showing it through various types of protest. I wish politicians would spend more time slving the problems on American soil rather than dinkin around with foreign strife. It's time for the floor to be swept in America and the cupboards cleaned out of the stale entities that feed the rats. Sorry for hijacking Dave.

The biggest problem is within your question. Rarely is a single mortgage ever sold. The mortgage paper is sold in bundles. They compile good or low risk solid mortgages with bad or high risk ones. If they were treated and sold individually the impact of defaulted mortgages would be much less. When you bundle up these mortgages, you are hiding the risk and horrible ones amongst the good ones, but that at the same time devalues, and cheapens the good ones. When you have too much of a percentage of bad mortgages within a package of good ones that risk cannot sustain the good ones when the bad ones fail. The value of the package, or asset goes down greatly, and eventually when enough fail, these packages no longer are even considered a worthy asset. Another problem is "banking", or regulation rules. The rules basically in a simplified form say that Bank X has assets that we call A. Bank Y has assets that are similar to Bank X's A. Bank Y took too much of a bigger risk, could no longer function, and had to sell to stay afloat, which is basically selling their assets. In order to sell quickly, or find someone who would buy, Bank Y had to sell for 30 % of the value of what the paper said their assests were worth. Now, because of the "regulations", or banking rules, all other banks or thrifts, including Bank X's A assets are now worth only 30 % of what they were before the sale of Bank Y. This forms a snowball effect amongst other banking institions, and then that snowballs into the consumers, which forms panic, which then causes massive withdrawls, which then causes massive failure, and soon a real bad recession. Screw politicizing the failures and bailout. Bailout only what is neccessary to maintain short-term continuity, fix and or change rules quickly to help other banking assets hold their value, maintain available credit to those worthy so the basics of the economy can keep moving, shut down panic, and show some F'n leadership by explaining and stating what is truely happening rather than talking out your lame ass mouth stating whatever the political winds sound good enough to get you elected.

True leaders? There isn't one standing right now who hopes to be president. What there is, is a Republican, and a Democrat, being, well, a Republican and a Democrat in search of votes to get to the presidency rather than showing some F'ing leadership, regardless of politics. The political winds of change have shifted direction and are blowing back the winds of politics of party.

By the way, breaking them up, not a bad idea. But, it's that leadership thing. Who is going to step in and put their career at risk by figuring out how? You don't see the little guys (small banking institutions) failing daily now. Seems the risk management by them was greater than the pursuit of inflated profits.

By the way Jerry, there is no true value on a single mortgage anymore.