Digging through the history of the financial debacale trying to do a postmortum I discover that the banks and investment houses are like a large ball of string tangled to such an extent that it makes you want to just throw it all away and get a new one. But we know that will never happen. These behemouths have grown their tentacles into every facet of American life. To pitch them aside like some sandwich wrapper would spell total ruin. The powers that be will be forced to maticulously unwind this knotted ball. Funny how we pride ourselves in being so modern always looking for new and more efficient ways of doing things yet there are some things best left alone. Just after the "great crash" of 29 laws were passed to prevent what has just happened. It was all there. Nothing complex that even an average person couldn't understand. But no, the banks and investment houses weren't satisfied with being just what they were. They just had to be something else. That glaze look of greed came over their eyes. How to make more? How can we con the government into changing the laws to our favor? That's what it was a con job. Logic and common sense were thrown out the window. It was easy but like boiling a frog it took some time. The first rule to go was the one that said a bank couldn't sell investments and investment houses couldn't be a bank. That I'm sure was an easy thing to eliminate. "Senator wouldn't it be nice if you could do your banking while you're here at our investment house." But no it didn't happen that way. It happened in the background by investment houses and big banks stretching the rules and getting into areas they had no business getting into. Like the two year old inching his way to the cookies after mom told him to stay away the financial institutions did exactly what they were told not to do.
These people were not satisfied with a set amount of return or business. They just had to have more like a drug profits and comissions could always be bigger. I've seen this in business. A company that grows to a certain point and when they reach a good percentage of market share aren't satisfied. It drives younger people in the company to look for more profit without thinking of the rules. We'll just call a product something else even if it violates the laws. We'll just make it so complex that it can't be regulated. And that's what they did. CDOs, hedges and derivatives became the savior of the time. Financial instruments so complex that I'm sure even those who sold them at times didn't understand or could value what they were selling. And the real beauty was that there were no rules, no SEC filings, no accountability. What a great playground for financial disaster.
Credit default swaps
Those wonderful little insurance policies that brought down a nation and possibly the world of banking.
( I'm not going to proof this there was just too much reading and research. So call me lazy)