selling loans wasn&#x27;t ever a problem, and I&#x27;m not aware of any time in recent history it wasn&#x27;t allowed.<p>the problem was that companies were allowed to buy insurance against bad loans they didnt even make, and insurers were allowed to sell more of that insurance than they had capital to back them up.<p>so when a person defaulted on their home, the homeowner lost, the bank lost, the insurer lost, and the company who bought the near garentee win insurance also lost.  capital flows froze, then companies who needed liquidity lost, and losses just kept chaining.