Thanks for the info on the johnabbey.co.uk article which gives a thorough explanation of the sub-prime fiasco. One point he makes re. the relaxation of regulation in the Clinton era is worth expanding on. From 1933, in the wake of the great depression the 'Glass-Steagall' was introduced into US law. This drew a distinct line between commercial and investment banks, restricting the commercials to generating no more than 10% of their annual revenues in securities trading other than government issue bonds. Also whilst they were allowed to sell insurance products, they were not allowed to underwrite them. Would be investors, depositors and crucially other banks therefore had an informed choice between 'Commercial' - Boring but Safe and 'Investment' - Sexy but Risky. It is arguable that it was the fact of this legislation that played the key role in the relative stability of the banking business both in the US and the rest of the developed world for the next sixty six years. In 1999, under pressure from Citibank, who wished to merge with Travellers Insurance inc thereby forming Citigroup, this act was largely repealed (Gramm - Leach- Bliley act).