Near zero probability with certain assumptions... Just before the 2008 crisis the probability was also near zero. Large banks had reserves in AAA rated securi

Near zero probability with certain assumptions... Just before the 2008 crisis the probability was also near zero. Large banks had reserves in AAA rated securities that were rated that way b/c the probability of default was near zero... until they defaulted. Banks and other regulated institutions have no incentive to reduce systemic risk as long as that risk impacts their competitors equally. If there had been no QE or bailout, we'd have seen a shrinking of the finance industry and one or two of the firms emerge with all the market share. There are certainly some possible events that could trigger another crisis. By definition those are thinks that the market currently considers highly improbable. They may be included in current risk models, which is why he says "close to zero" rather than "zero".