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Cassano, who became head of the unit in 2001, pushed AIG into the business of writing credit swaps default. Calling for the modernization of our financial regulatory system, I emphasized, however, that no major regulatory changes should be enacted while the financial system was under strain. The night before, Bernanke and Paulson had agreed that the time had come for a systemic solution; deciding the fate of each financial firm one at a time wasn

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He was, in fact, still preoccupied with reaction to the takeover of Fannie and Freddie just forty-eight hours earlier. But Jeffrey Kronthal, a Merrill executive who had helped recruit Ricciardi to Merrill, had been growing increasingly concerned that a storm was threatening not just extravagant projects like Costa Bella, but the entire CDO market, and he began to caution urge. Moderate Republicans, meanwhile, were inundated with complaints from their constituents, who wondered why the parties responsible for decimating their 401(k)s deserved any taxpayer money at all.

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