And for those who knowingly tried to play the game and lost, I have little sympathy.

But the fact remains that in a lot of these cases lenders did in fact steer these people into other products when they would have qualified for a VA mortgage which would have been more suitable, and I know that the "sales job" was in high gear during the bubble years with servicepeople (as opposed to renting a residence) because I saw it here myself.

This sort of exploitation of the men and women who serve our nation in the name of freedom - whether you agree with the war on terror or not - is wrong. There is absolutely no excuse for it and this underlines in bold, black letters why brokers and lenders must be held to fiduciary standards in terms of borrower's interests. This sort of conduct needs to be criminalized for everyone, but if we're going to start with one group of people, it ought to be here.

Now let's talk a bit about the "back end" of those risky mortgages. See, it is now starting to come out that auditors inside some of these companies - the investment banks on Wall Street - were intentionally overridden by supervisors when they attempted to flag fraudulent or questionable mortgage applications.

"Warren thinks her supervisors didn't want her to do her job. She says that when she would reject, or kick out, a loan, they usually would overrule her and approve it.

"The QC reviewer who reviewed our kicks would say, 'Well, I thought it had merit.' And it was like 'What?' Their credit score was below 580. And if it was an income verification, a lot of times they weren't making the income. And it was like, 'What kind of merit could you have determined?' And they were like, 'Oh, it's fine. Don't worry about it.'""

What have I been saying? That these fraudulent loans were intentionally packaged up and sold to investors. It was not so simple as "ignorance", it was in fact knowing misrepresentation, that is, fraud.

Well, now we've got people who actually worked inside these firms blowing the whistle.

Its about time.

This gets legs and I predict that people will go to prison.

"Bubba loves you" style prison.

Good, says I, and hopefully some investment bank CEOs will be on the list of those who get the perp-walk.

In the "just desserts" department we now have a new twist on the monoline-cum-CDO-hedge game - banks having to obtain approval from the monolines to unwind CDOs, and being unable to secure it, as doing so might risk the monoline's solvency:

"For the past several months as the credit crunch has pummeled mortgages and other forms of debt, a lot of collateral used to form CDOs has triggered defaults due to rating agency downgrades. As a result, if the banks begin dumping these problem securities, financial guarantors would be forced to pay default claims almost immediately - a tall order for companies whose financial future is already murky.

Typically, monolines pay out claims on losses over a period of 20 or 30 years, but the types of sales that the banks are looking to score would accelerate those payments and further hammer companies already hurting.

The banks appear to recognize that the insurers are unlikely to be able to cough up the cash needed to pay off these losses."

Aha! Now we see the truth of what I've been hollering about for a very long time.

The monolines don't have the money to back their so-called "insurance"; that is, the banks in fact bought used toilet paper and not actual swaps on those CDOs!

This ought to trigger intervention to force these banks to recognize the worthless nature of these swaps and mark the underlying instruments at their "native" credit quality immediately.

It is simply unacceptable to allow institutions to claim they have credit "enhancement" in the form of these insurance products once it is recognized that the counterparty cannot pay. These instruments are considered "money good" with no (or very little) reserve against loss specifically because they are allegedly insured - but the insurance is now recognized as worthless by everyone involved!

Your mortgage company would not let you claim your homeowners policy was "good" when your insurer had declared itself unable to pay claims. You would be forced to immediately secure replacement insurance from a company that can pay in the event of a loss, or pay off your note.

So why do we not see the SEC immediately do the same with the investment banks, and The Fed, OCC and OTS do the same for the commercial banks under their governance?

Are these banks are intentionally concealing the true value of these instruments (or lack thereof) while being well aware that they are impaired?

Why are our regulators allowing what appears to be an intentional violation of Sarbanes-Oxley as well as just good old fashioned common securities law?

THIS SHAM HAS GONE ON LONG ENOUGH AND MUST STOP!

Next up, we've got McCain. You know, the Presidential Candidate? Actually, the news is his Economic Adviser Gramm - and his ties to certain firms that have a problem with the United States Internal Revenue Code.

That'd be one Senator Phil Gramm. Most people don't remember Mr. Gramm, but you should. He is one of the architects of the Gramm-Leach-Baily Law that repealed the last pieces of Glass-Steagall.

That's the pesky little law that led indirectly to both the Tech Bubble and the Housing Bubble by taking the last pieces of Depression-era protection off the banks, allowing them to play their games and rape the public.