[1gor]

Artificially low rates would force anyone to seek yields at any costs, so portfolios were stuffed with all sort of junk, so your 'contained to real estate' point is not correct.

I would also argue that banks accumulated toxic assets because theey believed that they would be bailed out (moral hazard argument), which is the direct consequence of regulation.

'Too big to fail' idea has been around for quite long, one can start from LTCM more than 10 years ago, and it of course existed before that.

Fraudulent behavour is common to free market economies, but normally market participants develop mechanisms to filter out scammers (for instance J P Morgan used to say that nobody could become client of his bank without an introduction). It is when the government takes over controlling responsibility and then fails to deliver (Madoff) we have massive problems.