This should surpirse no one, that the big CDO (Collateral Debt Obligation) resellers knew that they were passing bad paper.

Why, you ask, would professional traders do this?

The answer is quite simple: DEAL FEES. I gotta keep buying collateral, in order to keep issuing these transactions as a CDO manager. Its my job: I gotta keep accumulating collateral, and I gotta issue the liability against that collateral.

Welcome to 3rd world Klepto-Capitalism, Wall Street style.