The short answer is, it couldn't have happened without them.
In August, large amounts of value simply evaporated from some of the biggest hedge funds in the universe -- $1.5 billion from a single Goldman Sachs fund alone.
As everyone knows by now, the sell-off was prompted by large numbers of defaults on mortgages that banks should have known better than to issue in the first place -- so called Adjustable Rate Mortgages.
The thing is, the reason so much easy credit (e.g. adjustable-rate mortgages) was available in the first place was that clever pure-math types on Wall Street -- they're called Quants, and they typically come from academic backgrounds, including mathematics and physics -- had figured out how to turn mortgage debt into financial instruments that could be sold to hedge funds, pension funds, and even individual investors.
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