Canadian Finance Minister Jim Flaherty finally decided he would have to do something that the Bank of Canada can't, or won't: tighten the availability of easy mortgage financing.

$3.5 Billion erased by buying at the top of the market in 2006 and walking away at the bottom in 2010.

From the Globe and Mail

It's a deal so big and so bad that one observer mused it was the city's worst property transaction since a group of Native Americans were swindled out of the island of Manhattan by Dutch settlers.

That means the investors who put up the original equity among them two California pension funds and the Church of England have seen their investments wiped out. Those who provided money for the mortgages, depending on the level of risk, will also take heavy, and in some cases total, losses. The owners defaulted on their loans, and at the end of January, said they would hand over the property to creditors rather than file for bankruptcy.

In the days before the housing crisis, the idea of a bank foreclosure filled any homeowner's mind with dread and shame. Now, with so many Americans owing more on their homes than they're worth, some people are taking a whole new approach: essentially saying, "Foreclose on me, please." It's more technically known as a "strategic default."

If AIG Financial Products had only employed the same simple technique as the rest of their storied organization for evaluating the quality of the risks they were taking on, their implosion could surely have been avoided.