The banks went down because of structured products, not exchange-traded options. Not all derivatives are created equal.
This time. I seem to think those black-scholes models, or whatever they are called, have been blamed for other "incidents" (ref Taleb and the Black Swan here).
Yup. The LTCM meltdown in 1998 was caused by options, if I remember right. Back then the Wall Street banks bailed out LTCM to avoid a global crisis of nightmare proportions.
And lots of lessons were learned, and taken to heart? (cough)