Osinski and his software was not the problem.
Too much money chasing too few houses caused the prices of houses to rise too fast (a bubble).
Too lax borrowing regulations enabled too many un-qualified people to obtain mortgages for which they had no ability to meet the commitments (the flood of money that caused the bubble).
Too lax regulations lays at the feet of the US congress trying to enable un-qualified voters to buy houses they could never afford to pay off (political favors cause a crisis).
Want to see the evidence? http://www.clearinghouse.wustl.edu/chDocs/public/FH-IL-0011-9000.pdf Barack Obama vs Citibank. Obama forces Citi Bank to write sub-prime mortgages they don't want to write.
Barney Frank on CSPAN holding hearings where he pretends to be concerned and not aware of the root cause. However Barney Frank was the main driver of lax borrowing regulations, and openly stated he knew he was increasing the risk of a housing failure. http://www.youtube.com/watch?v=sb56b2JC7qQ
Osinski's software allowed the financial industry to roll mortgages into bonds. History showed that a reasonable loss of a home mortgage default was ~20%. A CDS (credit default swap) is basically an insurance policy which could be bought from AIG to cover that 20%, making for a very safe AAA bond.
Basically too many mortgages failed too fast (the housing bubble bursting). Too many CDS policys get called causing insurance giant AIG to fail. The housing bubble has mortgages way over valued. Triple A bonds are failing... banks are failing. The US govt tries to prop up failing banks and AIG. People doing their jobs get the blame, Congressmen Frank takes the cover in plain sight by starting a witch hunt. Victims don't dare point a finger at a strong member of congress who has the power to not only cast personalized tax code upon them, but to also imprison them under contempt of congress charges.
The real authors of the whole scheme sit safely in London avoiding the 90% tax on performance bonuses.
Some people who did a great job in a division that earned money, but belonged to AIG got screwed royally, as their total compensation for the year is their performance bonus. Now taxed at 90%... Add in another 10% or so for state income taxes, 6.8% SSI and 1.4% Medical, and the effective tax rate is ~110%. I guess some think that justice.
I blame the US congress, namely Barney Frank, Chris Dodd, and Barack Obama. The British PM Gordon Brown alluded to this, putting Obama on the spot with a question about whom is to blame for the failure of the banking system. Notice how Obama choked badly? Obama knows the names well, they are Barney Frank, Chris Dodd, and Barack Obama.