I talked to a banker at the time (from BoA I think) and he said these things came about by the banks re-arranging the structure again and again, running it through the risk and credit rating algorithms and then tweaking and retrying until they got something with a good rating. So essentially that's like finding exploits in the other parties risk calculation algorithms or credit rating algorithms until you find some hack that labels crap as gold. So I think of it as hacking basically. The banks figured out how to hack Moody's algorithms, as it were.

Don't forget through all of that madness Moody's was rating utter crap as AAA

https://en.m.wikipedia.org/wiki/Credit_rating_agencies_and_t...