[Texas_shutterbug]

Derivatives ARE the problem. We could fix the mortgage debacle, but we cannot fix the derivatives mess.

[rb22982]

Everything I've seen on bank losses has almost entirely been CDO/mortgage bonds/credit writedowns--not derivatives. Only with AIG have derivatives seemed to have been a huge issue. They definately aren't helping the situation, though. Eg.

http://www.nytimes.com/2008/11/23/business/23citi.html?_r=1&ref=business&pagewanted=all
"Today, Citigroup, once the nation’s largest and mightiest financial institution, has been brought to its knees by more than $65 billion in losses, write-downs for troubled assets and charges to account for future losses. More than half of that amount stems from mortgage-related securities created by Mr. Maheras’s team — the same products Mr. Prince was briefed on during that 2007 meeting. "