The subprime mortgage crises: how the market was failed and manipulated

This chapter investigates the roles played by the Wall Street investment banks and commercial banks in triggering the worst financial crisis the markets have ever witnessed. The chapter also examines the shortcoming of the rating agencies, as well as failures of financial regulators during and after the crisis. The author proffers that the financial derivatives and other exotic financial instruments – including CDS, asset-backed securities (ABS), and collateralized debt obligation (CDO) – are not, in themselves, the financial “weapons of mass destruction” as it is being alleged. The author places the blame for the financial crises squarely and unreservedly at the doorstep of the unscrupulous and reckless institutional market practitioners, the unprofessional attitude and approach of the rating agencies as well as the regulatory failure on the part of the financial regulators and other gate keepers.