It's Not the How or the What but the Who

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Fit for a Purpose

In October 2008, the US stock market was in free fall, having plummeted almost 30 percent over the previous five weeks. Credit markets were stagnant. Formerly iconic companies like Lehman Brothers had gone bankrupt. Houses in Las Vegas had lost 40 percent of their value. Hundreds of billions of dollars had been committed to failing financial firms. And confidence in the US government was the lowest pollsters had ever measured.

The major US banks and credit-ratings agencies were called before Congress to testify and publicly shamed. They had created, endorsed, and sold thousands of securities based on risky, subprime mortgages that were now in default or about to be. One agency had told investors that the default risk to ...