this all comes down to the push from the liberals who forced fannie and freddie to make crap azz loans to those who couldnt afford them in order to push a socialist campaign tool to get more votes. how do we know this, they gave tons upon tons of money to the democrats via campaign contributions. ok, now that they fan and fred made these crap loans they need to create real estate backed bonds to sell so they can again have money to lend out. this brings us to our next leg that was broken. fan and freddie created these mortgage backed loans including interest only loans, arms, and other exotics, well when moody's, standard and poors, and the other bond rating agencies saw these mort backed bonds they said, "mortgage backed bonds, they get an auto AAA rating" when infact they were mostly junk bonds. they those who invested in these bonds thought they were investment grade now do not get didly squat from them. they fail safe rating system failed.
to explain lehman bros., bear sterns, and merryl lynch. that comes down to greedy gambling executive officers. they all owned these mortgage bond portfolios, these port. then are seperated into parts starting from AAA bonds all the way to junk bonds. what these E.O.'s did was they sold all the good bonds AAA - Bb and kept the majorit of the junk bonds expecting to gain huge money b/c we all know the riskier the inv. the more return. well guess what. when the loans do not get paid back and all your eggs are in one basket you loose.
to sum it up, GREED, both corporate and political (dems and reps). and its a shame we cant just let them all hang out to dry so they can learn a lesson. if we were to not bail these companies out other companies would buy them out maybe for .25 on the dollars a much better deal that for us tax payers b/c we well buy them out at a much higher rate. i.e 75-80 cents on the dollar.
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