Did Innovation Play A Role In The Financial Crisis?

It hasn't been a good year for the reputation of innovation. The word has acquired some dubious associations of late thanks to its connection to the economic crisis that has thrown global markets into turmoil. You may have heard that the crisis was fueled in large part by "Financial innovations" such as subprime lending, mortgage-backed securities, and collateralized debt obligations. While some argue that such products are perfectly sound if used properly, others say they amount to nothing more than good old-fashioned fraud.