“If you want a bad guy for all this, look at the guys who went crazy bundling bad debt and default swaps.’
As I understand it, this was mandated by Dim congressional action, even back in the Clinton years, and brought to full fruition by Barney Frank, as a means to give an equal opportunity for all to own homes, even the unqualified.
That was the collateralized mortgage obligations, the CMO's. The default swaps, the bright kids on Wall Street throught up by themselves. There was a PBS special about how it got started. The fun really began when people who didn't understand default swaps quite as well and who consequently didn't know how to price the risk premiums properly jumped into the market for the sake of the origination fees, etc. -- the front-end gravy was practically a license to print funny money.
The vast overhang is in the default swaps, which are valued in the scores, maybe hundreds, of trillions of dollars.