Fine, do nothing to the guys Greenspun was talking to. A deal is a deal. But there were also guys selling insurance on those mortgages (in the form of CDOs). Let's think about them for a minute.

Suppose you start a small company to sell earthquake insurance to people in California. You make a lot of money, more and more as the years go by with no earthquake. When the earthquake comes, you can't pay the policy holders. Should the government bail you out? Is it just too bad for the policy holders? Or did you commit fraud?

I don't like regulation but fraudulent activity should be illegal. You certainly can't get away with this with earthquake insurance because the insurance industry is "regulated". The financial industry needs the same kind of regulation. Right now there are huge holes.