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The flip side of that it is: Allowable as long as no specific law spells out it is illegal. That's great for civil liberties of individuals. In finance, that's

• AnthonyMouse 5y ago
  In finance, crashes happen because large numbers of people are putting their money into something without realizing that it's overvalued, and then they all find out at once. The 2008 housing crisis was caused by banks buying insurance against borrowers defaulting. They used a bunch of banking words to make it sound complicated, but that was it. Just nobody thought about what it would do to the bank's incentives. Not the insurance companies, not the regulators. So the banks lent money to a bunch of uncreditworthy people because they were insured, and inflated a housing bubble. Then when they all started to default, the bubble popped and bankrupted the insurance companies and therefore the banks. The Savings and Loan Crisis in the 1980s was caused by the government propping up failed banks. The banks were then insured by the government (sound familiar?) so they took on a bunch of bad risks because if they paid off they made money and if they didn't it was the taxpayer on the line. The theme here isn't banks doing creative accounting, it's moral hazard. They do just what you'd expect them to do if you insulate them from risk. But importantly, none of this has anything to do with KYC/AML regulations, which aren't supposed to prevent financial crashes. They're high cost low benefit regulations that don't even do the thing they're intended to do: https://www.icij.org/investigations/fincen-files/ https://www.icij.org/investigations/fincen-files/