The Bankers themselves didn't know their own exposure to bad debt as it was bundled and sold on and BOUGHT back.
....
It was the investment (gambling) side of the banks that got into trouble.
Yes. As I said, they took too much risk. The problem was not that they made a bad decision - in every commercial area people make bad decisions, and go down as a result. The problem was that we let the financial side of our society get into a state where we could not let the banks collapse, so they have been cushioned from the results of their own greed. Fear of failure is the thing that tempers greed, and we took that away....
I do take exception to your last part "Sometimes I dream of living in a world where humanity thinks..."
Why? Don't you? I don't think it will ever happen, though....
The Bankers acted in an immoral, greedy way and got caught. It was all done for their own REMUNERATION, nothing more.
That's the only reason anyone does a boring job like banking, as well as most other boring jobs. And the most greedy ones will rise to the top of the tree. The problem is not that they failed - we would have been quite happy if they had just failed. That would be commerce working. The problem is that we could not let them fail, so we are propping them up with taxpayers money.
I have no trouble with greedy bankers, or any other commercial types, trying to make more money. They should, of course, obey the law. If they are too greedy, and make the wrong decisions, they should fall. And if we find that we have to cushion them from their own incompetence and greed because we have bound ourselves so closely to them, I think that some of the blame for that situation should fall on us.
If you run a bank in a sensible way how can you lose, interest paid to depositors and a higher rate of interest paid on loans.
SIMPLES
You can lose very easily. I could start a bank next to you and take more risks. I will increase my deposit rate over yours, and leach all your customers away.
Of course, if I get it wrong, I will fail and lose all my customers' money, while the sensible customers who stayed with you at a lower deposit rate will be all right. In a nutshell that's what happened - the greedy banks offered more and the customers all flocked to them without considering the risk. That forced even the prudent banks to take risks or watch their share price and market segment slide, and that's what I mean by wishing the customers had thought...