I have a high opinion of you riginslinger. It is true that the entire banking industry knew that rating the sub prime bonds as AAA was pure fiction and a bald faced lie. Of course they could sell more AAA bonds than B bonds. They also knew that any drop in housing prices put the scheme in the toilet. Greenspan said 6 years ago that the housing market was full of froth (his word for bubbles about to burst)

As for using the money as a bail out I am dubious. Just like a bank robber all they wanted was the cash. Let someone else bail out the ship. In this case we are the galley slaves who will do the bailing for 3 generations - if there are no disasters or collapse of our infrastructure in the meantime.