I made a mistake in assuming the the self interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms, and it's been my experience, having worked both as a regulator for eighteen years and similar quantities in the private sector, especially ten years at a major international bank, that the loan officers at these institutions knew far more about the risks involved in the people to whom they lent money that I saw even our best regulators at the Fed capable of doing.
This quote is from October 23, 2008, when Alan Greenspan was brought before the House oversight and government reform committee. I encountered the quote while reading "In Fed we trust," by David Wessel, and here in a more complete form it certainly contains a lot more subtelty than what was conveyed in some contemporary headlines. I think it would be hard to look at the events from a year ago and come away saying that markets are capable of policing themselves. We'd certainly like to believe that events like the great panic were somehow avoidable. But what I love about the quote above is that it contains it's own fallibility. We know that markets themselves can't give us the markets we want, so we want to believe that more regulators might hold the key. Unfortunately, nothing to date has proven that the Fed or any new super-regulator would have had any better shot of avoiding this calamity. But I guess that's what we do, we don't like what happened so we try something new. I say go for it.
(no food I know, but Lara, you're the only one who reads this anyway, and it's mostly just a chance for me to write down a quote that I thought was interesting so I could get to it in the future)
