Appears Wall St CSEs dramatic increased balance sheet leverage replaced Buyers' liquidity & became a nuclear waste REPOSITORY for Level 2 and 3 assets

AFTER same Wall St firms attracted buyers of Derivatives, buyers appetite sated, then CSE's continued to underwrite new cousins of Derivatives and first generation derivatives - did what? - piled up; where? On and off balance sheet of supposedly regulated entities.

It seems clear that CSE's under the SEC's supervision and extra supervision as pointed out by Ms Borne in today's FCIC hearing -
created liqudity,
witnessed, were on notice and indeed participated in the KILLING of markets,
i.e. the "liquidity" demand provided by erstwhile buyers of derivatives
buyers of their proprietary "housewares" which dried up - this appears:

CSE balance sheet leverage REPLACED liquidity - huh?
As was penned here last year - see link here Leverage blessed Leverage blessed prop trades and (proprietary) Asset Valuations http://fiduciaryforensics.blogspot.com/2009/09/leverage-blessed-leverage-for-certain.html

Yet the CASH bonus parade continued its march - huh?
See also http://fiduciaryforensics.blogspot.com/2009/07/wall-sts-off-balance-sheet-expansion.html

Cash bonuses the result of ASSET price conversion - an illicit if not an illegal "conversion" it appears, subject to proof; and subject to ""Clawback" if fraudulent or with intent to deceive markets.

CSE's were the largest, most sophisticated players, investment banks on Wall St. The SEC enacted Consolidated Supervised Entities in 2004, discarded 30 years old required capital calculations, allowed CSE's to use their OWN proprietary valuation models to calculate required capital - true not making it up.

Incandescent insights into the so called Economic or Financial Crisis - as if it applies uniformly to all financial institutions - one appears singularly engineered BY and as a RESULT of only certain NY Federal Reserve district banks and investment banks - "Wall St market makers" like Goldman, et al.

When any Investment Bank could have said NO - at any time - to more MBS derivatives underwritings, leverage and PROPRIETARY valuation; but didn't.

Ending the siesta on the US taxpayer's dime - one little blog at a time.