Mortgage backed securities have been around since there have been mortgages.
the problem was that the banks were forced to give mortgages to people who never should have gotten them. The CRA was the thing that really started us down the road years ago.
One of the problems is that the big money center banks are confused with the guy running a branch on the corner. The banker on Main street had very little to do with our issues.
But who *forced* BofA to offer checking and savings accounts, credit cards, and mortgages to illegals with no identification, no proof of citizenship, no prior credit or credit rating, nothing.
The mortgage industry has been a criminal enterprise perfected under clinton with Fannie Mae and Freddie Mac. They USED that agency to literally rob the US treasury. This was no accident. The meltdown was a well planned robbery the likes of which the world has never seen.
Wall St. created two types of mortgages that were guaranteed to be non-performing in great numbers: the pay option-ARM, and the NINJA (no income no job or assets) loan. Loans of both types were packaged into MBSes - in very large numbers - and these MBS packages got AAA ratings, thus qualifying as eligible to be placed in pension plans and other big pools of money that require AAA securities by law or contract.
Problem was, the whole game depended on housing prices never going down (which makes the whole enterprise a Ponzi scheme). The number of ways in which people convinced each other that housing could never go down and therefore this was all kosher, were innumerable. But none of that can change the plain facts of Economics 101 - in a market, prices can go up or down. A situation where prices simply cannot go down under any circumstances is not a market at all, but something else.
When those things started going "boom" in people's 401k and IRAs and pensions is when people should have noticed this odd deviation from the laws of nature and started asking questions.
The banks were not *forced* to give these loans—they *chose* to buy into the gov’t get richer scheme. Many banks took a pass, and they survived just fine.