I think your point is that the people involved in supplying the loans were in the best position to see that they were offering comparatively lousy returns for the risk, and that they allowed their profit motive to get in the way of alerting the buyers (of the loans/loan securities). My point is that even the dumbest buyer knew that they were getting higher returns than Treasuries, and any person expecting to get those higher returns should peresonally bear most of the responsibility for understanding and accepting the risks that went with that.
I guess I bring a bias to this that I’ll explain. I like the caveat emptor rule for almost everything, barring fraud. If I want to buy a car, I think first about whether I want to take the risk of buying a used car. I know it may be cheaper than new, but I know the experts I hire to check it out might not catch everything. If I can’t deal with that uncertainty, I buy a new car. I just find it hard to deal with people blaming others for their problems, and I don’t like the moral hazard it introduces to the system when principals in a transaction turn to intermediaries and others to absorb responsibility.
