Re: Correction: It was the mortgage brokers, not the banks
That may have been true at the start but once the party got started they all wanted (needed) a slice of the pie.
A bank exists to lend money, the more money it lends the bigger the bank, the bigger the bank the more the CEO gets paid.
The maximum price a good can sell for is the amount of money the purchaser has at their disposal.
A mortgage leverages up the maximum amount of money a purchaser can offer.
Bigger lending = bigger bank = bigger payoff to executives.
Bigger lending = more risk = crash at some point (it is a pyramid)
1. forego some profit by getting out early (traditional) but if you get out too early the shareholders will crucify you
2. get so big that you become Too Big To Fail (and gamble on .Gov to bail you out)
Option 1 is a non-starter, would you want to be the (now redundant) CEO who missed out on the big one ?
Option 2 it is then, M&A between banks reached fever pitch and just before the crash, Lehmans got pushed under the bus. (big enough to pop the balloon, not big enough to be in the Big Boys club)
It was systemic fraud from start to finish, they knew what they were doing, the precedent was the .Com boom.
The banks, who for years had been laundering money from drug smugglers to terrorists and the CIA, felt they were impregnable, they had the government over a barrel (because they had colluded in the aforementioned illegalities) and so the government bailed them out.
The ordinary people will be paying for the banks (and your governments) malfeasence for years.
It wasn't subprime borrowers, they were just marks who were told that if they could hang in there for a year or two they would make money, by people who deal with money everyday (the banks)
The banking system is corrupt to the core and it controls the state and the government.
Good luck with fixing the economics of that.
 the real marks are ordinary taxpayers ie. rising taxes with reducing services.