re: Yahoo writes article "It's Obama's Presidency, but Bush's World

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the threatened banks with extinction if they didn't loan to people who had no business getting loans and then, as those loans began to stink, they rated MBS in such a way that only an idiot wouldn't take advantage.

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The MBS are rated within a few months of the loans being made. So those loans were still performing when they were rated AAA.

Only after the mortgage loans had "seasoned" did they start experiencing delinquencies. By then it was too late. The bonds had already been issued and bought by investors.

So, CDS were created and used to back the MBS. Of course, there were many billions of dollars more in mortgage loans than the insurance companies had in capital to absorb losses on the guaranteed by the CDS.

The system collapsed.