> then the banks would've been way more diligent and restrictive about loaning out the money No, because thats not how you make money. You make money by loani

> then the banks would've been way more diligent and restrictive about loaning out the money No, because thats not how you make money. You make money by loaning out as much money as possible for the highest rate possible. When the economy is booming, this works, because you don't need to call in the loans, you can parcel them up and sell them to someone else. This gives you more capital to lend out and so on. This means that bank failed _alot_ Just go back and look at how many banking runs there were in the states before 1913. both those companies are secondary market makers, rather than guarantors. Once again high finance likes to make out that they have "fixed" the problem of loans by using a "patented" method for optimum yield. Its always been either a rising market, or fraud that has driven those fancy methods. Sub prime was just coin clipping but in the 21st century.