Banks and Sub-prime (crooked) loans

It seems that many of our citizens do not fully understand the sub-prime loan market. It is similar to the title loan and short-term military robberies businesses, run by very wealthy people to get more wealthy!
I did see in the AJC today however a clear explanation as to what is going on: The following phrases were clearly used:
market dislocations related to owned securities will hurt profits.
exposure to collateralized obligations, comp[lex instruments, with slices of risk, partly backed with CDO with poor credit!
$3 billion of exposure to CDOs backed by sub-prime securities--liquidity support for commercial paper sold by CDOs is a problem of sorts!
We could have done a better job around sub-prime, most banks said.
How, I wonder, charged more? Bought bigger and better hedges? Paid the stockholders less dividends? Fired 5,000 Vice-Presidents?