That's correct, Bucco. But thru the invention of financial derivatives that permitted the creation of many additional levels of risk, "betting" and cross trading derivatives that were not at all based on the underlying sub-prime mortgages, Wall Street multiplied the losses incurred as the result of loan defaults manifold.

Here's an example. Assume there was a horse race with eight horses, with each one required to pay a $100 entry fee, and a single first prize to the winner of $800. That's a zero sum game. The most any horse owner could lose is $100, but he could win $800. Easy to figure out the risks involved.

Now let's assume that betting on the race skyrocketed all around the world, but no one kept the books on who was betting, how much they were betting, or whether they had the money to pay off the bets they lost. Then, let's assume that some really smart bettors figured out a way to get insurance companies to insure them against any betting losses, but the insurance companies took on way too many insurance policies of that type for them to pay off if a worst case scenario occurred.

The end of the line comes when the race is run, only to find out that a huge number of the bettors didn't have the money to pay off their losing bets. And then the insurance companies discover they can't pay all the bettors they insured when they came to collect on their policies.

Certainly, the problem began with too many mortgage loans to people who couldn't afford to pay them off. But the financial crisis was mostly produced by the financial derivative products invented by Wall Street, most of which weren't based on the underlying loans at all. All that risk was multiplied hundreds of times over when a large number of the original loans defaulted (and continue to default, by the way).