ABSTRACT
Among the various revelations that have emerged about the shenanigans that have gone on in the financial system in recent years, it is difficult to pick one that stands out as the most outrageous. Contenders would include:
s 4HE .).*! LOANS AND THE WIDESPREAD FRAUD DE FACTO IF NOT ALWAYS DE jure) in the mortgage industry that these loans represent. s 4HE IMPLICIT PERHAPS EXPLICIT ARRANGEMENT BY WHICH THE RATING AGEN-
cies gave high ratings to risky CDOs in return for continuing business from the underwriters. s 4HE HUGE SALARIES AND BONUSES THAT THE lNANCIAL lRMS PAID OUT TO THEIR
top executives and traders when these firms were pulling the economy into disaster and themselves taking government bailouts-and some were failing. s 4HE PAYMENT BY !)' WHEN IT HAD BEEN BAILED OUT AND WAS LARGELY
owned by the government, of 100 percent on the dollar to various other financial firms to which it owed payments in connection with failed mortgage-backed securities. Some $93 billion was funneled through AIG to large banks, with Goldman Sachs being the largest recipient at $12.9 billion. The government declined to negotiate lesser payments.
