Those are spot on analogies. I forget the name of the particular synthetic security case, but from the emails it was clear that the bank knew they were selling

Those are spot on analogies. I forget the name of the particular synthetic security case, but from the emails it was clear that the bank knew they were selling junk to their customers. From their sales materials / ppt / brochures its equally clear that they made no mention whatsoever that they thought it was useless/terrible/ and that they were shorting it. When a bank shorts something, and then turns around and sells the counter position to a client while promising them that it will go long, what else would you call it? Edit: I'm providing a reason only to why the Analogy is correct. Finance discussions are always complex, and the rest of your points I have no real beef with. I am only pointing out that the banks are playing asymmetrically. In these cases it would not be possible for the customers to avail of the "informed / educated investor" clause.