It’s not just the lending of money to people who couldn’t pay it back. At the root of this huge problem is the idea that such dodgy loans could be packaged up with good ones and sold on; thus removing it from the books and leaving the company to carry on with few inhibitions.
Before this idea became accepted; if a company made a bad decision - or several bad decisions - on a plethora of loans, then they would be the ones to suffer and the damage pretty limited.
After this idea became acceptable, then everyone sold their loans on with not a care in the world to what was being stoked up.
Bad stuff like this - tied up as a ‘good idea’ - replicates exponentially: as the mathematical modellers should know. It’s a complete failure of self-regulation in the financial sector, as whichever continent or country has learned to its cost. Whatever happened to objective monitoring of ‘new ideas’? Can anyone see the parallels with pandemic infectious diseases?
We may not have had H5N1 yet, but my goodness there has been another devastating pandemic of a ‘viral’ idea.