Not sure if it’s not both. In America, the SEC had been systematic defunded and weakened - over successive administrations. The argument, in the years before

Not sure if it’s not both. In America, the SEC had been systematic defunded and weakened - over successive administrations. The argument, in the years before 2008, was that more regulation only holds wealth creator back. Especially when the market self corrects itself. To suggest otherwise was even nearly un-American. The SEC policy had adapted to pursue slam dunk cases, ensuring that it’s resources were spent in achieving some form of guaranteed deterrence. However things like CDOs and the rest were out of its reach. This leads to the low oversight. The self correcting aspect of the market was also more mythical than practical. As a financial analyst we were encouraged to ensure that model predictions were within range of other firms. Multiples out of range meant that you were likely wrong. Faith in the market became a shortcut meaning “someone else has done the homework”. With all the rating agencies beholden to the purchaser of the rating, you start setting up the dominos for 2008.