This comment summarises the current situation reason for market panic quite well.  How and why anyone is willing to invest billions with no knowledge of the underlying investment is frightening.

Canadian Banks & Insurance

One reason for the sudden nervousness about the securities is that in
many cases the holders don’t know what kinds of debt they have. Given
the surprises in the U.S. subprime market, investors are panicking and
they don’t want to own asset-backed commercial paper any more.

However
some of the biggest investors in the market are the banks. Analysts say
that gives them a major incentive to try to keep the market healthy by
continuing to buy and by providing emergency funding when called on.