Yeah I can get behind that people should have known.
But in the case of the Mortgage Market prior to the crash I can't - simply because it wasn't an equal/level playing field.
In brief
1) CDOs => Mortgage Origniators no longer held back by their risk levels. CDOs can just offset it.
2) MOs incentives are now drastically different - Incentive now entirely to generate as many mortgages as possible, whatever the risk profile.
3) With no incentive to care who was signing, as long as they signed - MOs sold to people they knew were incapable of understanding the terms, nor ever meet the conditions, creating things like NINJA mortgages/loans.
The MOs held the information advantage, and then abused it (look at the marketing material of the time) while now including people that they KNEW were out of their depth.
Politicians and citizens alike were pounding on the banks to lower their standards before the crash. Everywhere there was rhetoric about home ownership being a right, and that the evil banks were standing in the way. It's not like this was an evil scheme that the banks cooked up.
Erm - The politicians were being funded by banks and focus groups?
Heck de facto end/death of Glass Steagal was when Citi went ahead and merged with Travelers, even when they knew it would precipitate in a court case and most likely an end to the regulation
But in the case of the Mortgage Market prior to the crash I can't - simply because it wasn't an equal/level playing field.
In brief
1) CDOs => Mortgage Origniators no longer held back by their risk levels. CDOs can just offset it.
2) MOs incentives are now drastically different - Incentive now entirely to generate as many mortgages as possible, whatever the risk profile.
3) With no incentive to care who was signing, as long as they signed - MOs sold to people they knew were incapable of understanding the terms, nor ever meet the conditions, creating things like NINJA mortgages/loans.
The MOs held the information advantage, and then abused it (look at the marketing material of the time) while now including people that they KNEW were out of their depth.
It was like stealing candy from a baby.
Edit: Formatting, point placement and flow