Quote from: bigbox on November 06, 2012, 11:55:44 PM

Quote from: JoelKatz on October 26, 2012, 01:37:26 AM

By the way, this was the same type of missed risk that resulted in the mortgage collapse. People who thought they were "diversified" didn't realize that a significant fraction of their assets were vulnerable to a drastic drop in the housing market because they were all ultimately tied to residential mortgages.

I'm glad you think it's the same. There have been hundreds of bank failures since 2008 in the USA due to correlated loans that went bad (mortgages). The FDIC guaranteed bank deposits. This guarantee was honored, regardless of whether the bad loans were correlated or not. Patrick also guaranteed his deposits.

http://www.fdic.gov/bank/individual/failed/banklist.html

The FDIC is specifically insurance and specifically assumes the risk of bank failures. In addition, there was no mistake on the part of the people whose funds the FDIC insured. So it would not have been equitable for the FDIC to split the losses with those it insures. (Also, even if equitable, it would have been politically infeasible. Any loss of confidence in the FDIC would defeat the point of the FDIC.)

Yes, Patrick guaranteed his deposits. But as he made quite clear, that guarantee was predicated on his belief that there was no significant correlated risk. (The transcript in the scammer accusation thread makes this clear.) So against someone who didn't make that same mistake, it would be enforceable. But against someone who did, it isn't. If Patrick is responsible for losses caused directly by this mistaken belief, so are others who have that same mistaken belief and it causes the same type of loss. (Unless the agreement was otherwise. It's possible he had different loans with different terms and some weren't predicated on the shared belief that he had limited Pirate exposure. You'd have to look on a case by case basis and decide in each case how to equitably divide the losses.)