Michael Lewis is one of the best financial writers of our time. He worked in the brokerage business early on and has been writing about money and markets ever since. His idea that there needs to be a clear division between institutions that advise and those that speculate, is exactly right. This would be simple to implement; and exactly what big banks are lobbying against with all their considerable political capital.
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Credit default swaps came about because of the Community Reinvestment Act which forced banks to make unsound loans. This was their method of dealing with the bad debt they were forced to take on by Progressive politicians who to this day are economic illiterates and believe that the government can do anything repealing the laws of common sense, economics, and simple arithmetic.