Easily worked out? Yet another fractured fairy tale version of history.
The crash happened this time for exactly the reason that critics of the subprime legislation in the late '90s & subsequently said it would, namely allowing investment banks to get involved in mortgage lending, while at the same time dictating that banks no longer abide by tried & true mortgage restrictions.
That there were fewer & bigger banks in 2007 than in 1997, 1987, 1977 or 1967 & earlier only made it worse & easier for Paulson to stampede Bush & Congress into the unneeded TARP bailout. Not too little, but too much was done by government.
Rubin no sooner got this witch's brew enacted than he returned to Citi & began profiting from mortgage-backed securities. The situation got worse when loan fraud investigators were switched to counter-terror ops after 9/11.