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I am going to tell today a simple story of greed, rationalization, and sloth; it is a tragedy in three acts. The first act involves the collapse of what I will call the Great American Housing Bubble. The second act involves the failure of the gatekeepers, in particular; what happened at those credit rating agencies that could lead them to rate everything investment-grade? In the final act, I will turn to the collapse of the investment banks, the failure of securities regulation, and where that leaves us.

Although this is a tragedy, it is not a Shakespearian tragedy because Shakespearian tragedies feature either a noble hero or an epic villain; but there is no such greatness anywhere in this story. Its cast resembles more a herd of lemmings racing over a cliff, each trying to get out in front of the others.

Nor is it a Greek tragedy, because there is no inevitability. The gods did not decree these outcomes. And a few firms were actually smart enough largely to escape the crisis, thus proving that failure was not inevitable.

If my tune suggests a skepticism of the business community, it may have some Marxian roots. However, the Marx that is influencing me is not Karl, but Groucho Marx. Some of the things that happen in this story look as if they could have been lifted from scenes in A Night at the Opera or A Day at the Races.


Banking and Finance Law | Law