You missed the bit about the banks not being able to resist lending to people who couldn't afford the repayments...
This isn't quite accurate. A number of banks in the US had Sub-prime departments who actively sought out retail customers who were likely to default on residential property mortgages. Capital appreciation + Repos = boon.
This isn't quite accurate. A number of banks in the US had Sub-prime departments who actively sought out retail customers who were likely to default on residential property mortgages. Capital appreciation + Repos = boon.