True enough. But where were the rating agencies, and the sophisticated buyers at the consuming financial institutions, on this? Asleep at at the switch, as far as I can tell. It's the fact that such paper was salable in a secondary market, at something other than an appropriately deep discount, that allowed the game to continue as long as it did.
Rating agencies? Probably the same ones who were sleeping at the switch in the S&L fiasco in the 80’s.
When big bucks are being made nobody is watching out for you. Think Enron, Tyco, the dot.com mess, the illegal alien invasion.
“Oversight? Oversight?? We don’t need no steenking oversight!”