I don't think you understand how this works in real life. I worked in the treasury department of a large bank 12 years ago and saw first hand... 1. mortgages a

I don't think you understand how this works in real life. I worked in the treasury department of a large bank 12 years ago and saw first hand... 1. mortgages are pooled, usually around 10,000 per pool. 2. the pool is divided up into tranches by the bank. This means that out of 10k loans, x% are supposedly AAA, y% are AA, and so on down to junk ratings (usually a small portion of the pool). 3. the bank has their treasury department "validate" the tranches, but this is really just "spot checking" and not fully investigating the details of every single mortgage and its associated paperwork 4. the bank sends the pool to the ratings agency 5. the ratings agency sends it back approved, never even spot checking whether the bank's review was accurate or not 6. the bank creates "securities" or "paper" based on the tranches 7. investment entities purchase the paper...this is usually municipal bonds and other organizations expecting the AAA rating to be a "guarantee" (though it's really a gamble) So ... in 2008 when the financial industry figured out that years of securities with false AAA ratings had been sold throughout the world, well, we know what happened... None of this has changed except they expect the banks to maintain enough cash to handle any wobbliness in the financial markets....but the core problems still exist and has nothing to do with prime or sub-prime mortgages.... It's about accurate and clear information and an industry that literally banks on the lack thereof...