Although it was ultimately caused by negative lending practices in the US sub-prime mortgage market, and the eventual packaging of those loans into securities, the crisis was not a case of these bonds actually failing as the popular view would have you believe.
In fact most of these bonds were redeemed at par, but problems occurred when their value deteriorated, they were marked to market, and couldn’t be sold without severe loss.
The problem during the crisis was that there was no one there to buy the paper when it needed to be sold and held until the volatility abated.
Despite a decade of rules and regulations, little has been done to solve this problem.
In the US the Volcker Rule and other measures have forced banks out of the ABS markets, where they can feasibly no longer act as market makers providing liquidity.
Global capital rules mean that ABS paper is incredibly expensive to hold and there are few balance sheets big enough to take on ABS trades with a long term view in a volatile period, even if they were confident that the bonds would redeem.
The market had a small taste of illiquidity in the first quarter of 2016, when a slowing Chinese economy and declining oil prices froze ABS markets.
Those few months served as an example that liquidity is still suspect in volatile markets and may not be there when sellers need it.
If worse is to come — and surely it will — bonds will be downgraded, mark-to-market values will tumble and many of the large institutions investing other people's money across the globe will look to sell.
But will there be any buyers?