What is an MBS, ABS, Security trust, etc. and why should you care?

Like I said there are many twists and turns in this .What I was pointing out is the banks and lenders commited fraud and dumped loans that didnt even meet the lower citeria and represented them as if they did ,countrywide being one of the biggest players . I too strugled with the criteria to buy a home and learned some costly lessons,like making sure the lender reports your payments to the credit reporting agencies . AIG isnt suing for fun they were defrauded and they intend to get at least some of thier losses back and our government should do so as well. The bailout was done because there was no time to sort it all out before it was too late . There is no reason now that we have all the time in the world that we cant sort it out . Like I said AIG did the same thing and paid out at the time but now they are going through the books and Freddy and fanny should be doing the same. You forgot some other factors as well such as a total disconnect of prices from real value [that home was never worth 300k and it never will be] ,the use of SPV to bundle loans and dump them in government backed trusts right before the burst ,allowing stated income , giving loans that the buyer could never pay when the real payments hit,we could go on and on . I watched the home prices go through the roof and it didnt take a crystal ball to know that the bubble would burst ,when home prices rise above what the middle class buyers can pay its no question but I guess they had a solution for that ,FRAUD. The buyers are just as guilty as the banks ,it seems nobody cares what it costs they only look at what the payments will be today. I really doubt that the Dodd ,Frank bill was designed to be used in the way it was I seem to recall Barney was crying foul for quite a while about how it was being used and the need for oversight . Im out Peace

Doug: You seem to have missed a critical element to the whole mortgage issue. Two key players - Barney Frank and Chris Dodd managed to bring about a major change in the mortgage loan qualification criteria from that which was pretty much standard for generations. The intent was to give more lower-income people the opportunity to become homeowners. The problem was that there was little (if any) thought given to what would happen to these folks applying for and getting these flexible interest loans when the flex term boundary hit and the interest went up and/or the original home value dropped. Since little (if any) down payment was at risk, many decided that it was easier and financially wiser just to walk away from these mortgages. The old mortgage qualifications were in place for a reason and they worked. For example, my wife and I scrimped and saved for 12 years before we were able to get enough for a 20% down payment . . . but we did it. As a result, we would not have considered just walking away because we had worked too hard to get to where we were to begin with. Now if we add to the mistake made by Barney Frank and Chris Dodd, the naturally unscrupulous nature of much of the world banking industry, they were almost certain to find a way to get someone . . . anyone else to pay when they came up short. With so many of our politicians on their payroll with election and re-election donations, finding backing for the bailout of the century was a snap!