And the reason why banks, and not only banks, lost so much on the papers is because the loans were basically worthless. Banks knew that loans were worthless but

And the reason why banks, and not only banks, lost so much on the papers is because the loans were basically worthless. Banks knew that loans were worthless but the paper's ratings created a different impression, boosting the loans. The spread part is very important. If there were no betting, selling and reselling of the papers, then only bad lenders would collapse.