When American financiers were flogging subprime mortgages back in the credit boom, were they completely delusional? Or were they driven by cynicism and greed? Did they, in other words, know that the housing market was a bubble – or did they actually believe their own hype, even as the frenzy grew?

It is a question that armies of lawyers and prosecutors have asked in recent months, as the public flails around seeking a culprit to blame for the financial crisis. Unsurprisingly, many politicians and prosecutors have tended to err on the “greedy and cynical” side. With the benefit of hindsight it’s hard to imagine that any banker close to the mortgage market in 2006 could have failed to spot the excesses; or that anyone who was repackaging those loans into bonds – or “securitising” them, to use the industry jargon – did not spot the risks. Documents subpoenaed from the banks and credit rating agencies certainly show that some individuals felt uneasy – and (unwisely) expressed their concerns in colourful emails.

But last week three American economists at Princeton and Michigan issued some startling new research – and it should make us all pause for thought. For if you look at the personal financial decisions of the bankers involved in securitisation in that period – at the very heart of the credit bubble – it seems many believed their own hype. Many of them not only bought large quantities of housing stock at the worst possible moment (ie in 2005 and 2006), but also did so in some of the most “bubbly” markets, such as southern California. They then failed to sell those properties in time – and thus were left nursing losses after 2007. Or to put it another way, the bankers who were repackaging housing loans not only lived by the mortgage sword, but suffered under it too.