This is true, and the subprime crisis did not become such until all that bad paper was bought up by the TBTF entities.
Who needs to go to jail here? In my opinion it's the rating agencies who slapped AAA on all that crap, but I'm not holding my breath waiting for that to happen.
“the subprime crisis did not become such until all that bad paper was bought up by the TBTF entities.”
The non-conforming subprime paper generated by the investment banks and hedge funds were time bombs and were sold all across the globe. Anyone who bought the stuff was going to suffer serious loss. When this paper started blowing up you had a threat to the ability of the credit markets to operate. It was an implosion of this paper that ‘broke the buck’ at one of the premier money market funds, and it was that event that prompted Paulson to tell Dubya that something had to be done to save the credit markets.
The rating agencies led unsuspecting buyers over a cliff. It will be years before anyone trusts their judgement again.