flstf

I skimmed this document and halfway understand how bad loans were made. What I don't understand is how or why the institutions involved took these loans and bundled them into leveraged packages that totaly collapsed the world's banking systems because the inflated real estate market corrected. Why couldn't they just take the loss? Why were they leveraged so much that a reasonable drop in real estate prices caused most of the major banks to go belly up? And the most important question is why did our government regulators allow this to happen?

I realize that there is probably greed and political corruption involved but even the ruling classes should not want to kill the goose that lays the golden eggs.