Congress passed the Sarbanes-Oxley Act in 2002, placing some very stringent, inappropriate, and inflexible reporting rules on financial institutions. Under this law, financial assets must be valued at fair market value--- even if they are not for sale! The Working Capital Model eliminates this problem entirely, but it is difficult to apply when the individual securities are not identifiable.
More than 95% of Americans are making their mortgage payments right on schedule, yet there is no market for the financial products that contain these mortgages. Consequently, balance sheets reflect trillions of dollars less than the maturity value of the securities held by the financial institutions.

Politically, using the financial institutions as a scapegoat is easy and, judging from Internet polls, effective. John Q is furious, but at only half of the problem causers, and for the wrong reasons. How many of you have stopped making your mortgage payments just because the market value of your home has fallen?
The SEC itself requires full disclosure from all registrants. The interests of the customer are always placed first--- except of course, as was the case with Collateralized Debt Obligations (CDOs), when an act of Congress prohibits the SEC from having a look. Could they have stemmed the tide? It doesn't matter. What matters is that complicated products are reviewed more carefully in the future.