No, commercial banks securitize home mortgages, allowing retail banks to free up capital.
A security is essentially a contract. When the US was a largely agrarian society, security contracts (options and futures) helped insulate farmers from market fluctuations. Options allowed a farmer to negotiate a crop price and contract with a distributor or processor when the crop was planted rather than when it was in bushels, protecting the farmer from wild fluctuations in price when he came to sell. I think they may have also stipulated a quantity, for which the farmer might face a penalty if he was not able to fulfill the contract.
Later, securities became trading instruments, being applied to even common stocks, allowing traders to gamble on stock movement. The MBS involved in the collapse were securities composed of fractions of multiple mortgages aggregated into individual contracts, the premise being, I guess, that failure of one component mortgage would have less of an impact on the overall contract, and losses would be absorbed by the broader market.
The problems arose when the banks began to get creative with mortgage lending, creating loans that a rational, reasonable person would not sign on to without being gulled into it. Basically, they were designing mortgages to fail so that they could draw loan interest for a few years, then take the property and resell it for little or no loss. What they did not count on was massive concurrent failures resulting in a buyer’s market for real estate, where the could not recoup the loaned value in resale.
The MBS amounted to money loaned from the commercial banks to the retail banks, which the retail banks found themselves unable to repay. I think AIG was providing financial insurance on the securities themselves, and the claims became more than they could handle, which is how they figured into the picture.
As far as I can tell, there was too much capital out on spec, and the spec was bad. GS does not appear to have had a direct effect on the collapse, but sensible banking oversight probably would have helped a lot. I think the situation was developing late in the Clinton administration, but obviously the subsequent administration was not particularly inclined to address the problem (regulation = baaaad) even though it was not at all a secret.
There is plenty of blame to pass around, and the current administration seems no more inclined to fix things than any of the last four. It just remains to be seen when the next collapse will be (before or after the 2016 election) and whether the next president will be just slap on another band-aid or actually take action to make things better for rich guys or for average guys (both is possible but historically unlikely).