In the 17 December eWeek (an IT trade magazine) Eric Lundquist wrote:
"The technology shortcoming of 2007? Despite their continued investment in technology, the finance companies looked increasingly foolish as the sub prime mortgage crisis intensified. Banks and financial institutions -- traditionally the most robust technology buyers-- continued an embarrassing dance of writing down billions of dollars in debt without the ability to track and estimate how much greater their losses might grow."
Eric is clearly a believer of the "Corporate IT can predict the future, travel in time, and leap tall buildings with a single bound" theory. The sub prime mortgage mess was caused by wheelers, dealers, and scammers who finally got caught. Investors finally wised up and stopped buying "bonds" (actually IOU's) "backed" by pools of sub prime mortgages. The holders of these IOU's know they cannot sell them, so their actual cash value is zero. Nobody reports that, 'cause that loss is so bad as to force the reporters of same into bankruptcy. The holders hope that maybe, some time in the future, on a sunny day, they might be able to sell them for something, but nobody knows what. So rather than report the ugly truth, they report a small and not too hurtful ugly, or say that they don't know.
Anyone who thinks that a clever piece of software could have prevented the sub prime meltdown is kidding himself.