Below are two videos showing how the federal government (not wall street) caused 2008 Financial Crisis.
Video 1 shows that it was the government who:
1) Bundled toxic (subprime) loans into securities
2) Used financial alchemy to make risk "disappear"
3) Designed complex financial structures to hide the fraud
4) Developed insanely optimistic evaluation models to inflate ratings on toxic securities
5) Marketing these toxic securities to an unsuspecting public
Video 2 shows that it was the government who:
1) Created the entire infrastructure necessary for the subprime market to function
2) Decimated state authority to regulate the financial sector
3) Shielded subprime lenders from prosecution
4) Encouraged banks to buy toxic CDOs and to get rid of safer assets
"As to new financial instruments, experience establishes a firm rule ... that financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design, one that owes its distinctive character to the aforementioned brevity of the financial memory. The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves, in one form or another the creation of debt secured in greater or lesser adequacy by real assets, that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment"
-john Kenneth Galbraith, A Short History of Financial Euphoria
Links to articles in video 1:
Blowing up the Lab on Wall Street (TIME, August 16, 2007)
Calling
Out the Culprits Who Caused the Crisis (Washington Post, September 21, 2008)
U.S.
Gets Creative to Sell Junk Bonds (Los Angeles Times, April 04, 1990)
TIME
TO SPEED UP THE S&L CLEANUP (CNN Money, November 16, 1992)
Managing the Crisis: The FDIC and RTC Experience (FDIC's
website)
Chapter 16.Securitizations
Tainted
Legacy (Portfolio.com, October 12, 2008)
Links to articles in video 2:
Managing the Crisis:
The FDIC and RTC Experience (FDIC' s website)
PANEL 2 — Asset
Disposition
Tainted
Legacy (Portfolio.com, October 12, 2008)
Uncle
Sam Knows Best about the Economy - Except When He Doesn't (Bloggersbase, March
5, 2009)
The
Bet That Blew Up Wall Street (CBS, August
30, 2009)
Predatory
Lenders' Partner in Crime (Washington Post, February 14, 2008)
How
a secret rule caused the crisis (CityAM, February 22, 2010)
Greed
Layered on Greed, Frosted With Recklessness (New York Times, June 15, 2009)
State
TV in Egypt Offers Murky Window Into Power Shift (New York Times, January
31, 2011)