Like many other banks and finance companies, Green Tree used a process called securitization to resell its home loans to outside investors. Green Tree grouped thousands of these small loans into a pool worth hundreds of millions of dollars.

Whatever the potential pitfalls, banks are increasingly enthusiastic about venture capital, particularly in new companies with strong prospects in fields like health care and technology.

Big banks have long had private equity divisions that put up capital for deals too complex or risky for individual shareholders to finance.

The biggest profit center for investment banks is the hefty fees they charge for underwriting stock offerings and giving financial advice, and analysts put those profits at risk if they publish negative conclusions about the companies that pay the fees.

Business cycles lengthened greatly during the 20th century, as central banks learned to manage national economies by raising and lowering interest rates.

Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.