Cramer: Blame the Mortgage Insurers

The blowhards and bluff artists and the Gang of Four -- Ambac (ABK Quote), MBIA (MBI Quote), MGIC (MTG Quote) and PMI (PMI Quote) -- truly have blood on their hands for this moment. So do the ratings agencies, the mortgage insurers and the salespeople who packaged undocumented loans and pushed buying homes with no money down.

The whole apparatus stinks and we are now seeing the unwinding, but I think that the false assurances created by the Gang of Four and their insistence to not worry made everyone way too complacent. Their glib promises as well as the incredibly lax work of the ratings agencies, S&P and Moody's, enabled the whole edifice to be propped up.

And once it was clear to them that they needed more capital, they chose to forgo the window and attack the shorts. Had they raised the capital they needed and had the ratings agencies said they can't bless any more of this junk, we might have never been in this spot.

But we are there. The big problems that everyone has from Fannie Mae (FNM Quote)to Freddie Mac (FRE Quote) to Bank of America (BAC Quote) to Washington Mutual (WM Quote), frankly, aren't the defaults. The default rate for FNM mortgages is amazingly low, around 1%. ...