Wall Street banks have spent the past five years recovering from massive wounds they inflicted on themselves and the country at large. The banks bet they could build a housing doomsday machine, feed it criminally flawed mortgages, and have the story end with fat bonuses and smiles, rather than recession and grief. Now Wall Street is at it again, with bankers dusting off their doomsday machine. If they get their way, the housing market will become even more susceptible to catastrophic meltdown than it was before the 2008 crash.
During the housing boom, Wall Street banks made piles of money selling allegedly safe mortgage instruments called residential mortgage-backed securities. This business was hugely lucrative — so good, in fact, that banks poisoned the mortgages they sold their customers just to keep business flowing.