If banks had simply lost the value of the defaulted mortgages it would not have been so bad, especially for AIG, They had leveraged those mortgages for many, many times their value and insured this worthless paper against loss. By far the most damaging wave of foreclosures were not the poor people but the investors who walked away from investment properties, where does CRA figure into that?
AIG isnt a mortgage company.
Mortgages were not AIGs problem.
Other than being totally wrong, good post.