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It seems to me that the root cause to the computer models failing was that the government stepped in to "help." Once government requirements were put in place,
by bestes 18y ago
It seems to me that the root cause to the computer models failing was that the government stepped in to "help."
Once government requirements were put in place, I can only imagine the level of red tape required to make changes to what was a dynamic system before.
None of this was mentioned in the article. Does anyone have any facts on this?
- bokonist 18y agoNothing I have read indicates that was the case. I believe Raganwald above is mostly correct. The major roll that government played, is that by setting the precedent of "too big too fail" starting twenty years ago, and by setting interest rates too low, it enabled Wall St to play with far more risk than was wise.
- j2d2 18y agoIt was precisely because regulation was removed that the current conditions were possible... http://en.wikipedia.org/wiki/Glass-Steagall_Act#Repeal_of_the_Act http://en.wikipedia.org/wiki/Glass-Steagall_Act#Repeal_of_th...
- jwilliams 18y agoDo you mean capital adequacy requirements? Because there is discussion that the biggest failures were where the SEC relaxed it's requirement. http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/ http://www.nysun.com/business/ex-sec-official-blames-agency-...