The fraud was clear cut, though. Bankers were treating mortgage pricing in different areas as independent, and that was the entire underpinning of CDO risk tran

The fraud was clear cut, though. Bankers were treating mortgage pricing in different areas as independent, and that was the entire underpinning of CDO risk tranching. That assumption is obviously wrong, and it was obviously wrong before the crash. The reason I know that is that it was obvious to my entire class of interns at Citi in 2006 during the bank's training sessions, and we asked our lecturer how you could assume a lack of correlation in housing prices in different areas and even nationwide. If it was obvious to a group of quant interns, I don't buy that the people structuring them didn't know on some level. At best it was financially-induced blindness.