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To restore TRUST this is what Denninger recommends:
1. Force all off-balance sheet “assets” back onto the balance sheet, and force the valuation models and
identification of individual assets out of Level 3 and into 10Qs and 10Ks. Enact this requirement
beginning with the 3Q 2008 reporting period which begins next month. Total taxpayer cost: $0.00
2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity
markets. This permanently defuses the derivatives time bomb. Give market participants 90 days to get
this done; any that are not listed in 90 days are declared void; let the participants sue each other if they
can’t prove capital adequacy. Total taxpayer cost: $0.00
3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer
leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or
more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of
the excess taken down monthly. Total taxpayer cost: $0.00

On another note:

"ABC News has learned that tax refunds are now on hold in California for the first time in state history, according to the state controller's office. "

Let's say that a Californian buys a TV online for $899 plus $50 shipping and pays by credit card a total of $949.
The TV is delivered. The TV company calls the buyer the next day to say, "We apologize for the mess up but the TV price was actually $799....you overpaid. However, we're going to keep the extra $100 dollars since we have some unexpected bills to pay."

How pissed off would said Californian be?

I realize everyone here gets this but it leaves me shaking my head at Arnie's gall.

I will be amazed if there is not some sort of suit filed in "Gullifornia" over this.

wrt your #2: the CME http://www.cmegroup.com is implementing (perhaps more accurately attempting to implement) exactly that step: transparency of CDO deals. It appears, however, that only newly coined CDOs are reluctantly being placed upon such an exchange and there is the same reticence we've seen as far as "retroactively" placing existing CDOs thereon. CME wants the biz, that ain't hard to figure. The holders and writers of existing CDOs are understandably terrified of anything resembling mark to market in this space.