believed their own business proposition. Holding MBS was very profitable at prevailing funding costs. The banks in the mortgage supply chain were at the source of the profit. So why not get rich too? It was a choice. Not every bank did it. Those that took the biggest risks were large mortgage originators and the most aggressively expansive commercial banks—Citigroup, Bank of America and Washington Mutual—and the two smallest and scrappiest investment banks—Lehman and Bear Stearns. By contrast, J.P. Morgan began throttling back its mortgage pipeline already in 2006 and bought as much protection
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