"To a certain extent, proprietary trading was the key driving force that was behind the disaster," says Jeremy Berkowitz, a finance professor at the University of Houston. "For whatever the reason, Lehman and other banks decided to take positions in mortgages, and when those positions went south, so did the firms."

The role of proprietary trading - when banks buy and sell investments for their own accounts rather than their clients - and other principal investments in the financial crisis is getting new scrutiny. On Thursday, Feb. 4, the Senate Banking Committee held its second hearing in a week on President Obama's proposal to keep banks, which hold federally insured deposits, from engaging in such risky businesses as proprietary trading and hedge-fund and private-equity-fund investing (all three activities contain some element of trading or investing for the firm's own account, possibly employing leverage). Many have dismissed the so-called Volcker rule, which Obama named for former Federal Reserve chairman and current presidential adviser Paul Volcker (who has championed the proposal), as unnecessary. They say proprietary trading played a very limited role in causing the financial crisis, that poor lending and underwriting were more to blame.

"The financial crisis was caused by the juxtaposition of regulators who really didn't believe in regulation, and excess leverage," says Jon Corzine, the former governor of New Jersey and a former chief executive of Goldman Sachs. "We need stricter, higher capital rules for the banks. That's a much better solution than trying to limit a type of business that is hard to define."