Regarding the neverending mortgage meltdown, Atrios wondered today:
Short version of the story: Fannie offloads its risk onto WaMu, and WaMu offloads its risks onto eAppraiseIT, an independent appraisal company. Of course an entity such as eAppraiseIT likely doesn’t have even an infinitesimal fraction of the assets needed to actually cover potential liability here (or, presumably, sufficient or any insurance), so they may as well have offloaded all their liability onto my cat Gizmo.
…adding, it doesn’t mean that the liability has successfully been disappeared. We’ll have to wait and see who ultimately holds the bag at the end of the day.
A short time later Atrios answered:
Why that would be us.
Not that this counts as breaking news, but once again Republicans prove that they only believe in personal risk for little people. Mommy government can’t possibly allow the country club guys to lose their membership when next year’s taxpayers could shoulder the weight instead.
The crazy part of it is that Republicans are right when they argue that taking away consequences encourages bad decisions. Water flows downhill, behavior follows incentives. If we let the investor class actually lose its shirt over systemic screwups then we would have a lot less of them.