Second, without the fake CDO market, there is no demand for junk mortgages generated by boiler rooms. Remember, the fake CDO market was created not to serve the housing market, but because it was slowing down. The renewed demand for CDOs gave new life to the boiler rooms and pushed mortgages to increasingly marginal borrowers.

But the strategy of speeding up the assembly line had devastating consequences for homeowners, the banks themselves and, ultimately, the global economy. Because of Wall Street’s machinations, more mortgages had been granted to ever-shakier borrowers. The results can now be seen in foreclosed houses across America.

Third, we are getting closer to an accountability moment. Names are named. Here’s how an “independent” CDO manager was forced to buy Merrill’s junk:

An executive from Trainer Wortham, a CDO manager, recalls a 2005 conversation with [Merrill CDO chief Chris] Ricciardi. “I wasn’t going to buy other CDOs. Chris said: ‘You don’t get it. You have got to buy other guys’ CDOs to get your deal done. That’s how it works.’” When the manager refused, Ricciardi told him, “‘That’s it. You are not going to get another deal done.’” Trainer Wortham largely withdrew from the market, concerned about the practice and the overheated prices for CDOs.

Ricciardi declined multiple requests to comment.

And that’s not the only name.

Fourth, this story is well-documented and includes, remarkably, on-the-record quotes from the likes of Fiachra O’Driscoll, the co-head of Credit Suisse’s CDO business from 2003 to 2008, the whole time.

Here’s what O’Driscoll says about the supposedly independent CDO managers:

“[T]hey were indentured slaves.”

Fifth, Goldman was not above it:

A little-noticed document released this year during a congressional investigation into Goldman Sachs’ CDO business reveals that bank’s thinking. The firm wrote a November 2006 internal memorandum [10] about a CDO called Timberwolf, managed by Greywolf, a small manager headed by ex-Goldman bankers. In a section headed “Reasons To Pursue,” the authors touted that “Goldman is approving every asset” that will end up in the CDO. What the bank intended to do with that approval power is clear from the memo: “We expect that a significant portion of the portfolio by closing will come from Goldman’s offerings.”

Goldman (formerly an Audit funder) told ProPublica/Planet Money that the CDO manager was independent and the deals were fully disclosed.

Finally, the CDO daisy chain here is shown to have started incredibly early, 2005, and accelerated as the housing market began to fall in mid-2006. In a properly working market, the opposite would be the case.

By March 2007, the housing market’s signals were flashing red. Existing home sales plunged at the fastest rate in almost 20 years. Foreclosures were on the rise. And yet, to CDO buyer Peter Nowell’s surprise, banks continued to churn out CDOs.

“We were pulling back. We couldn’t find anything safe enough,” says Nowell. “We were amazed that April through June they were still printing deals. We thought things were over.”

Instead, the CDO machine was in overdrive. Wall Street produced $70 billion in mortgage CDOs in the first quarter of the year.

Stories like this will help to end once and for all the great and false debate about whether the financial crisis was caused by unpreventable systemic imbalances or whether institutions and individuals can and should be called to account.

The answer of course is both. In the end, as this story shows, it’s not that complicated.

If you'd like to help CJR and win a chance at one of 10 free print subscriptions, take a brief survey for us here.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.