Did Psycopaths Blow Up The Economy?

Tim Iacono, via Ritholtz:

Wild-eyed buyers lined up for blocks to buy new condos and mortgage brokers with barely a high school education were raking in hundreds of thousands of dollars a year in commissions by peddling all kinds of “exotic” mortgages to borrowers who, in many cases, didn’t really understand what they were signing.
As we’ve come to find out, there was a good deal of fraud involved here by both lenders and borrowers as few seemed to care about how their individual actions might affect others in the fullness of time.
You might say that a good asset bubble brings out the psychopath in many of us.
Everyone was swept up in a financial bubble of the largest magnitude and, with only a few exceptions, economists were content to look at their models – models that ignored the “shadow banking system” and failed to reflect how a rapidly inflating asset bubble was affecting behavior – while predicting clear sailing ahead and patting each other on the back for having done such a good job.
The worst of the psychopaths were on Wall Street and those tales of excess came to light in the years that followed.
A pattern of disregard for others was at the core of what Wall Street did with mortgage backed securities and related derivatives, a point that became clear as internal emails were released in the years that followed. Investment banks made boatloads of money – both in selling securities and then betting against them – and this behavior became standard operating procedure for some firms.

If a dumb farmer can figure out that it isn't a good thing that $500,000 interest-only loans are being advertised on the radio, and that real estate being the chief topic of investment stories might indicate a bubble, then most anybody on Wall Street should know there's a bubble brewing.  I don't quite subscribe to the psychopath diagnosis, but I do think many more people than let on knew that this was a giant scam.