A federal study reported on by the New York Times says what many people already knew:
The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.
The lack of regulation is no secret, and if you know anything about the world of banking or any other trust business, if you don’t have people checking and regulating, the whole thing assuredly turns into some 17th century confidence scheme.
That was one of the great lessons of the early 20th century and the Great Depression. The financial system depends on trust, and if you don’t have anyone checking to make sure that the trust is merited, (trust but verify, right?), the system turns to be on that’s an honor code.
Honor codes don’t work if the point of the group is to take money that is in other people’s hands.
I saw a news headline that New York State has finally caught up with Ernst & Young for Lehman Brothers’ Repo 105 fraud scandal. I’ll have a bit more on that in the near future.