I do blame Cox for part of this. While derivative trading and construction is not totally regulated (it would not be Cox, anyhow — that would be an SRO) the SEC does have the duty to examine SEC filings. The post Enron laws gave them plenty of ammunition to “review” earnings reports of the public BDs. That is all it would have taken to stop this or short circuit it a long time ago.
I agree completely with your last paragraph. It will be interesting to see just how the mark down (cramdown) the CDSs. The CMOs should not be too hard to at least ball park.
Done right this could be a heck a money maker for the fed. Done wrong it is a federal jobs program for million dollar a year NYC peeps, er perps.
It mattered not if the reporting was accurate, as by the time the ink dried, things had all changed.
Cox, and the entire Fed could not advise anyone on what to do with the balance sheet, as there was no guideline or way to value it. The market could not determine it, and if they could not, then the value essentially was zero! But you can't put that on your balance sheet.