A guy can't default on a loan he's not offered. The cause of the crash in 07 was not just that loans were offered to people that should never have been offered to them in the first place, it was that the value of those loans was misrepresented to investors when the banks bundled those loans with others and sold off pieces of interest in those bundles and insurance on the bundles, both their own bundles and other banks' bundles. In fact, if the value of those underlying loans was accurately represented to investors, the crash wouldn't have happened at all. Loan originators, bundlers, raters and insurers all failed to communicate the risk involved in the investments they were creating and offering for sale to investors and to each other. It's their job to know the risks involved in making a loan and how those risks multiply when bundled with other like loans; they have access to all the actuarial data that lets them know the rates of default and repayment and they have enough money to pay people to do the math to figure up the risks. If the pieces of those bundles had been accurately valued, investors would have been able to buy the pieces of those bundles, or not, and adequately hedge against the risk therein. Because they were lied to about the risk, by the banks, they weren't adequately hedged, and American's IRAs, which were, of course, managed by these self-same banks and which bought up the pieces of the bundles like they were a fat kid and it was a 5 cent candy bucket, lost between a third to half of their average values.