The fact that banks’ balance sheets shifted away from relatively illiquid assets (such as mortgage loans) towards a business model whereby the banks originated underlying loans which were then made tradable and negotiated in the open market (the so-called “originate and distribute” model) made it harder to draw clear distinctions between previously distinct categories of financial player.
At the same time, new investors – notably hedge funds – were born out of the need for market-makers in previously unknown types of securities.