BUBBLES, BUBBLES, EVERYWHERE….Speaking of herd mentalities, the New York Times asks a pertinent question today: how is it that so many financial professionals were apparently unwilling to speak up about the subprime mortgage debacle back when it could have done some good?

The cast of characters who missed signals like the rise of delinquencies and foreclosures is becoming easier to identify. They include investment banks happy to sell risky but lucrative mortgage debt to hedge funds hungry for high interest payments, bond rating agencies willing to hope for the best in the housing market and provide sterling credit appraisals to debt issuers, and subprime mortgage brokers addicted to high sales volumes.

….Oddly, the credit analysts at brokerage firms now being pummeled were among the Cassandras whose warnings were not heeded. “I’m one guy in a research department, but many people in our mortgage team have been suggesting that there was froth within the market,” said Jack Malvey, the chief global fixed income strategist for Lehman Brothers. “This has really been progressing for quite some time.”

….So why did many of the smartest minds on Wall Street somehow miss the signposts that these insiders now claim to have seen coming?

In this case, at least, the answer is actually pretty clear: greed. Nobody wanted to spoil a party at which so many people were making potfuls of money.

The rating agencies probably bear an outsized share of blame here because they’re supposed to be neutral. But guess what? They made lots of money on this stuff too and were reluctant to piss in the punch bowl that was responsible for rising revenues and big bonuses. In case you’ve forgotten the details of this sordid story, take a trip down memory lane here.

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