Thom is absolutely correct that the origin of the problem was the CDS's

The asset bubble in RE market could never have existed without the CDS market an in fact the investments banks (Lehman and Bear Stearns in particular) were the ones who created subprime/Alt A loans and continued to erode tradition UW guidelines BECAUSE they could turn around and package these risky loans and make shitloads of money selling the CDS's . Around 2005 is when hedge funds started figuring out that they could game the system (and btw - the system was the totally unregulated CDS market) and create pools of loans that were intended to fail so that they could make shit loads on money on the CDS. Propublica had some good info on this.

AGAIN - without unregulated CDS's the submprime/Alt A market would have never gotten as fatally big as it did and the "crash", if we even had one, would have been much smaller

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