On 'Newsnight' the other week, about how the "Regulators are always behind the curve ... and they always will be" (Nick Leeson), no-one had a viable answer to "How do we stop this?".
I had one, which I posted on my Facebook group. Tell the traders "You can only do business like THIS at this point in time - if you want to use new vehicles/methodology/structures/models, run them past us FIRST so that we can evaluate them, dictate the parameters and monitor from the outset." Otherwise we'll be forever fire-fighting and not actually capping the well. We are over-regulated, which just ties everyone in knots - it's a sad indictment of modern banking when we have to enforce caution and insist that customers are treated fairly. These qualities should be givens and certainly more closely reflect the banking system I was part of as regional manger for an Australian bank back in the early 80's before the Gordon Gekko factor took hold.
I was delighted to have my views endorsed by author Tom Lines ('Making Poverty - A History'). He directed me to his article 'The Dog that Didn't Bark', which looks at at the 28 years following WW2 when there were no such crises. It's a thought-provoking walk through financial history and concludes with some credible recommendations to restore order - I commend it to you as essential reading in the current economic climate.