We thought they were regulated, but they were not else they could not have got away with this fraud...repealing the so called bucket laws allowed this to happen...short trading also played a huge roll.
OK. So in other words the existence of the SEC and other regulatory agencies led you to mistakenly believe that trading in exotic securities you didn't really understand was safe? You thought somebody was keeping an eye on things. We now know Maddoff actually wrote some of the SEC rules.
Do you really think CDO's and other weird derivatives would have come into the market if the government wasn't lending credibility to them?