Volcker says let 'em fail

Paul Volcker, former Fed Chairman and current adviser to President Obama, told the Senate Banking Committee that hedge funds and private equity funds should be allowed to profit and fail on their own, without government support.

Which is how capitalism should work, and hence, sound policy. The problem is that charities, foundations, schools, churches, states, and municipalities who speculated in over-the-counter (OTC) derivatives will go bankrupt when these toxic assets sink in value. Why exactly did these entities "invest" in these swaps? Who was minding the fence?

http://www.bloomberg.com/apps/news?pid=20601103&sid=axxnPYqTocfY