In the new economy, central banks and bank regulators were all-powerful. In 2005, David Oddsson, the former prime minister of Iceland, became governor of Iceland’s Central Bank. Economist Brad DeLong mused: “It is either our curse or our blessing that we live in the Republic of the Central Banker.”1
In 1933, President Roosevelt argued for financial regulation:
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.... There must be strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money.2
Over time, the regulations were relaxed. Enacted to regulate the financial sector, the UK ...