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Once again the federal government has left Americans in a precarious state as a terrible storm is passing through the U.S. economy. Like Hurricane Katrina, some folks thought the government could keep them from harm, but, as in New Orleans, things have gotten out of control quickly as bad housing loans have shredded the economy. Christopher Cox, the head of the Securities and Exchange Commission, knew for perhaps a year that some large financial and insurance companies were buying risky housing loans, hoping to make a quick buck on consumers paying mortgage interest. But instead of issuing strict warnings against such irresponsible business moves, Cox sat in his Washington office and fiddled. Unlike Cox, most investors in companies like AIG and Merrill Lynch did not know that bad loans were becoming part of their portfolios; they had no idea their so-called "blue chip" stocks were really Las Vegas-type situations. And Cox did not tell them. Continue reading the full column...
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