[Onkel Neal]

Originally Posted by Neal Stevens

Changing the subject slightly, has anyone watched the Frontline program about Brooksley Born and the CFTC? Caution, this may incite your passions.

Hmmm... I was a bit surprised this thread and that program did not get a lot more responses here, seeing how long people here can discuss the bailouts, financial crisis, Wall Street bonuses, etc.... Stuff like Wal-Mart profits got more discussion here that some of the underlying causes of the global financial crisis.

Well, whatever. I listened to another interesting program this morning on NPR:

According to bankers and others involved, the Magnetar Trade worked this way: The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations -- CDOs. If housing prices kept rising, this would provide a solid return for many years. But that's not what hedge funds are after. They want outsized gains, the sooner the better, and Magnetar set itself up for a huge win: It placed bets that portions of its own deals would fail.

The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going (you can listen to it here). If you have no idea what a Credit Default Swap or an equity tranch is, you may like this--it explains many of these "complex" financial things pretty well as it goes along. It helped me understand areas I was fuzzy on.

Other links to the Magnetar story are at Propublica, the outlet that built the story.

If you haven't watched the Brooksley Born story on Frontline, I would be interested to know why.