Those who play the blame game can find plenty of targets here: the bankers and the regulators were equally clueless. But should anyone be blamed for not recognizing the implications of regulations that they don't even know exist?
Omniscience cannot be expected of human beings. One really would have had to be a god to master the millions of pages in the Federal Register — not to mention the pages of the Register's state, local, and now international counterparts — so one could pick out the specific group of regulations, issued in different fields over the course of decades, that would end up conspiring to create the greatest banking crisis since the Great Depression. This storm may have been perfect, therefore, but it may not prove to be rare. New regulations are bound to interact unexpectedly with old ones if the regulators, being human, are ignorant of the old ones and of their effects.
They go on to say:
The financial crisis was a convulsion in the corpulent body of social democracy. "Social democracy" is the modern mandate that government solve social problems as they arise. Its body is the mass of laws that grow up over time — seemingly in inverse proportion to the ability of its brain to comprehend the causes of the underlying problems.These are the general points. They go into good detail to justify these points. Basically, The People complain about risk to their standard of living or wealth, as they first did after the '29 Stock Market Crash. The government steps in to build cushions of safety, so if a disaster like the previous one happens, people won't be completely wiped out. But, rather than behave conservatively within this new safety cushion, people (individuals, banks, whoever) think "I can make more money if I push to the limits of this cushion", and then set themselves up for new disasters. I think this ties in neatly with the problems in Greece and California.
