Unless they’ve bought CDS insurance, backed by our tax dollars. Then they have a great incentive to see them burn and payout a second time. The insurance wouldn’t have any reserves so we could fees them from tax dollars again while our schools, roads, and even courthouse administrators beg for cash. All for the common good, of course.

This is the old claim by insurance companies that if they have to pay for ____ (fill in the blank) they’ll have to raise rates. Yep: if insurance companies can refuse to pay legitimate claims, and holders of sub-prime notes can escape liability, rates will be lower. Then again criminalizing mugging hurts the market for muggers. There’s a reason for rules that sting: to prevent behavior.

Assigning all the rights of a creditor to the companies that *knowingly* purchased these notes — the right to foreclose, collect, garner deficiency judgments, and everything else — while absolving them of responsibility is nonsense.