What caused the current financial crisis?
So you had the makings of this buildup. For years, John Weinberg and John Whitehead ran Goldman Sachs as an advisory firm that handled M&A. It wasn’t a trading house. And that [trading] became the mantra of most of them. With risk management and interest rates low, and credit easy to come by, the ballooning should have been obvious. There was no regulatory involvement by SEC in some new products. As these mortgages were piling up, someone had the bright idea, “Why not package them from the North, South, East and West in different slices?” And so you have diversification and therefore a very good product. They trotted down to the rating agencies. And the rating agencies accommodated them with triple-A ratings. For awhile. They pulled the ratings of triple-A sometime after that when they began to recognize that it wasn’t as clean as they thought it was. About that time, the accounting profession said we’re going to mark-to-market [accounting standards] instead of using cash flows to dete
