Surprisingly and inexplicably, the Senate and House financial reform bills fail to institute any significant regulation of CDOs. Both bills are entirely silent on synthetic CDOs, and thus have missed the elephant in the room.
When we paid $62 billion to AIG "counterparties," we weren't saving the economy, we were paying off the bookies. The money we gave them didn't go toward saving one house or one mortgage -- it went to Wall Street.
Goldman is not solely responsible, but it has a large role in AIG's crisis and a unique position of conflicted interest and influence over the terms of the bailout. Now that the crisis is over, this issue should be reopened.