As Mark Twain said, “History never repeats itself, but it does often rhyme.”

The Wall Street Journal recently reported on the SFVegas 2025 annual meeting for the structured finance industry.

What, might you ask, is structured finance? Well, think back to the 2008-2009 Great Recession that was brought on by subprime (no money down, no credit rating, no job — no problem) mortgages that were packaged up by Wall Street in a wide variety of securities and sold to investors.

Mortgage-backed securities, credit default swaps, collateralized debt obligations, and even “synthetic” versions of these (whatever the heck these were). Warren Buffett called these “financial weapons of mass destruction.”

All of this was expertly explained in Michael Lewis’ book, The Big Short, and in the follow-up movie by the same name.

Perhaps scarier — and even more in depth — was the film, Margin Call, which showed how these products nearly destroyed the global banking system.

There were honest fears that bank machines might actually stop spitting out cash as the nation’s biggest banks were nearly taken down by the collapse of residential real estate.

The quick actions of Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke literally rescued the banking system from bankruptcy.

And don’t forget what happened to the stock market as the Dow Jones Industrial Average fell by 53% between October 2007 and March 2009. Whoops!

Well, it appears Wall Street’s wizards have been busy again. The Journal reported that “convention halls in the Aria Resort & Casino were packed for four days with bankers and their clients, in uniforms of Italian sport coats and office sneakers” — some of the same folks who attended similar conventions back in 2006.

They were pitching new securities backed by corporate loans; consumer credit-card debt; lease payments on cars, airplanes and golf carts; and data center financing.

No more lousy subprime mortgages to package up, but plenty of other fun choices.

According to S&P Global, sales of “publicly traded structured credit” hit record levels last year and new asset-backed securities like collateralized loan obligations (sound familiar?) are expected to hit all-time highs.

All of this can make you wonder why. The reason seems fairly simple to a long-time (and usually skeptical) market observer like me: FEES.

With fees on hugely popular products like index funds hitting all-time lows, trading commissions almost nonexistent and mortgage issuance at low levels, Wall Street has got to create complex products that are promoted as offering higher returns and, more important, much higher fees/profits.

It’s long been my experience that the more complicated these products get, the higher the fees are.

Note the pitch is that these products are “relatively safe and yield more than government-backed bonds.”

Well, that was the same pitch on mortgage-backed securities back in 2006-2007, even though unbeknown to investors, they held subprime adjustable-rate mortgages with even the worst tranches being given AAA ratings by S&P and Moody’s.

Heck, they were mortgages, and what could be safer than mortgages?

As rates reset higher on the adjustable-rate mortgages, homeowners couldn’t meet the increased monthly payments with already stretched budgets, and default rates soared. Empty houses were in foreclosure everywhere.

One of my clients actually set up a business to buy foreclosed homes on the Phoenix courthouse steps: $120,000 for 5-year-old, 2,800-square-foot, three-bedroom houses that had originally sold for $350,000 or more.

His gain was the result of huge losses for the homeowners, banks and investors.

The question is whether these new products are a good deal for investors. Without getting too technical, I find it interesting to see that “credit spreads” (the difference in interest rates between high yield “junk” bonds and U.S. Treasury bonds) are at near all-time lows at about 2.5%.

As you can see from the nearby chart, it hasn’t been that low since 2007. That is a pretty modest additional return for the additional risk, and the timing is kind of eerie.

A little voice in my head tells me that investors should exercise caution when considering these products that those 10,000 folks at the Las Vegas convention were getting so excited about.

One basis rule of economics is that higher potential returns must come with higher potential risk; there just is no free lunch when investing.

But identifying the risks can be challenging, especially when risks can be hidden during good economic times. As Buffett said, “Only when the tide goes out do you discover who’s been swimming naked.”

Just a handful of investors worked hard enough to see the risks of the subprime mortgage debacle before it collapsed, like those featured in The Big Short.

The big banks and brokerage firms sure didn’t see it as they made massive bets with a few like investor Steve Eisman and hedge fund manager Michael Burry who foresaw the mortgage meltdown.

Lehman Brothers failed, Merrill Lynch was forced into the hands of Bank of America, AIG was bailed out, and Washington Mutual was seized with a bargain sale to J.P. Morgan — while Eisman earned more than $1 billion and Burry made more than $800 million for himself and his investors.

Will bonds backed by lease payments on data centers prove safe or will a shift in the fast-moving tech business (and artificial intelligence) leave them in default?

What kind of underwriting standards were used for the car loans, credit cards and airplane leases?

What if the currently strong economy sours with lower quality companies that issued junk bonds struggling to make bond payments and their employees losing jobs and unable to repay loans?

All things to consider when making your own decisions — to play it safe or take more risk with hopes of higher returns.

Let’s all just hope that history, like what happened in 2008, won’t repeat. Or even rhyme.