Most publicly traded financial entities were slow and limited in the amount of risk they reveled to their investors. Many of the really bad bets they made are

Most publicly traded financial entities were slow and limited in the amount of risk they reveled to their investors. Many of the really bad bets they made are still hidden from public view. These entities were not caught "by surprise". This was not an accident or a surprise. Executives of these companies have for years been talking behind closed doors about the risks of the bets they were placing but not disclosing this information to their investors (mostly public shareholders). On a smaller scale (relative to this crash), the dot com boom saw massive public market fraud as well. I was in the middle of it in NYC during this time and personally witnessed massive fraud and insider trading with NASDAQ entities. The direct result was that the outside public investors paid for this fraud. I have seen enough details of what bank and related financial entities have done over the last 10 years (and another cycle of bad behavior another 10 years prior and then another) to understand that they did not come close to disclosing the nature of the risks on and off their books. This is actually pretty scary to think that a public financial entity can even have such a thing as an "off the books" position.