While the total loss has yet to be determined, the excesses of single-family residential lending have been largely revealed as the latest chapter in the long running story of financial structuring, inadequate regulatory oversight and myriad conflicts of interest. To some, the alchemy apparatus of Wall Street — SIVs, CDOs, MBS, etc. — were viewed as the tools of a golden age of global finance. Indeed, for a time, it seemed as though credit would expand indefinitely, risk no longer existed and the bankers that delivered this golden goose would prosper mightily.

In the late 1980s, the area south of Market Street in San Francisco was pocked with rundown warehouses and empty lots where garbage collected on street corners and transients camped. Perhaps improbably, MacFarlane Partners, an investment and development company, came in and drew up plans for a hip, vibrant neighborhood. They called it Bayside Village. Now that area is one of San Francisco’s most desirable neighborhoods — complete with a nearby baseball stadium, shops and restaurants — where a 460-square-foot studio rents for $1,670 a month.