What was Wall Street’s role in the great economic crash of 2008?
They principally played the role of suckers buying trillions of dollars of mortgage-based securities. They had no idea what they were buying. Nobody did. Because there were no reliable models on subprime loans.
Subprime loans are a recent development. They became big under President Bill Clinton who ordered Fannie Mae and Freddie Mac to buy vast amounts of them so as to make it more affordable for credit-risky consumers to buy a home.
Bloomberg reports on the bitter fall-out: Investors who sued over $351 billion in downgraded Countrywide Financial Corp. mortgage-backed securities after the 2007 subprime market collapse may have to settle for less than 1 percent of what they initially sought.