Rating agencies, sub-prime mortgage lenders and investment banks are DEFINITELY the biggest titles at fault. The main reasons have already been covered; rating agencies failed to rate the toxic assets properly, leading investors to make dangerous choices. The toxic assets, according to them were "safe". This clearly states that they did not do their job. The sub-prime mortgage lenders are the root of the problem, as they were the ones who had the guts to start up all the toxic assets to create securities to lend to all kinds of people, responsible and irresponsible. The investment banks then went around and spread it all over the place, and they are the reason why sub-prime mortgage lenders had the motivation to do such a thing in the first place. The homeowners get a pretty small slice (than what I originally intended) even though it was their choice whether or not to buy up the homes, because they lacked reliable sources of investments thanks to the rating agencies (whose piece of the pie will have over 800 calories on it).

Asset-backed Security (ABS)

"A security which has a value backed by a pool of underlying assets, such as consumer or commercial receivables. One example is Mortgage-backed security, or MBS."

Source: http://www.hfh.com/hfhweb/GlossaryofTerms/tabid/68/Default.aspx

Define: Collateral Crisis

The crisis occurring as the collateral on a bank's balance sheets is not performing as well as announced. This occurs often with securities when the borrowers are not paying their loans, resulting in the company not having the money recorded on its balance sheets.

The term was found from http://www.skeptically.org/ecodev/id14.html

This is a follow-up to Abdiwahab's question about the role of the SEC.
http://www.sec.gov/about/whatwedo.shtml

The main purpose of the SEC is to protect investors while maintaining good markets. The more compelling objective would be to protect the first-time investors, as they wrote that more and more new investors turn to markets for their future. The SEC makes its rules based on their philosophy that all investors should have access to certain basic facts about an investment prior to buying it, and so long as they hold it (worded exactly as on the site). To achieve this, the SEC forces all public companies to disclose reliable and useful information to the general public, that investors may read over and decide whether or not to turn to a certain company. The SEC looks over the securities around the world, and anything concerning securities exchanges, securities brokers and dealers, investment advisors, and mutual funds to safely guide investors over the world.