I am not certain that the entire first sentence is true, but speculation and usury are high on the ladder. Isn't the second sentence obvious? Who is taking the hit on this sub-prime rip off? Who pays those unbelievable rates on their credit cards, save for the peasantry? Who has to go into bankruptcy under Chapter 7 rather than Chapter 13?
As regards your comment, let me paraphrase our last elected president: 'Keep it simple, stupid'. (Not you.) Try this from my days as a logician: "The greater the extension, the less the comprehension."
Well, you've got me started, and you know what I am sipping. Here goes:
'Hedge Funds'? Bull cackle! They are nothing more than 'Regulation T (Margin Requirements) Evasion Funds'! Their shareholders put a pittance up, and the banks supply the rest - with your money. Since the 'managers' get a grand slice of the alleged profits, they get taxed at long term capital gains rates - each year. But they do own a couple of shares. Now, let us assume that one owns stock in, and works for Citigroup, shouldn't his salary and dividends be taxed likewise, without going through a 69 page workout?
Bank of America. Once the largest bank in the U.S. (And which could operate across two state lines.) When it was Giannini owned back in the 1970's, there was a 6% limit on what California municipalities could pay on their loans. Rates were substantially higher. But just as Giannini did during the Great Depression, making cheap loans to farmers and others (who never forgot), they underwrote 6% loans. Then some smaller hillbilly bank in north carolina took them over. They now have fees for their customers' having false teeth.
One more. A hillbilly state in the upper mid-west (idaho?, iowa?) rid themselves of 'usury' rates. Merrill-Lynch soon opened a 'bank' there. ( After paying the politicos off.) Credit card companies soon followed.
Sorry, one more. How many people in the world know what 'LIBOR' is? What does a rate now, have to do with a 'fixed' rate in the future? HIBOR is next!