Stupidity More Than Malfeasance (Although Plenty Of That Too)

TW: This Friedman column does a nice job of framing a common sentiment, this financial crisis is as unnecessary as it was avoidable but at the end of the day common greed took over. Not just on Wall Street but everywhere. Where were the adults?

From Friedman at NYT:
"...some of America's best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn't only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so...

"This [analyst] wasn't saying that Wall Street bankers were corrupt," he added. "She was saying they were stupid. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of borrowed money, and imagine what they'd fetch in a fire sale...

"What he underestimated was the total unabashed complicity of the upper class of American capitalism ... 'We always asked the same question,' says Eisman. 'Where are the rating agencies in all of this? And I'd always get the same reaction. It was a smirk.' He called Standard & Poor's and asked what would happen to default rates if real estate prices fell. The man at S&P couldn't say; its model for home prices had no ability to accept a negative number..."
http://www.iht.com/articles/2008/11/26/opinion/edfriedman.php