math_geek

I found this quote from Suresh Sundaresan made in 2005 that completely predicts our recent financial crisis a full 2 years in advance:

Overview of Presentation
Negative Aspects of Credit Disintermediation

1. Asymmetric information and Moral Hazard issues have
yet to be sorted out satisfactorily in contractual agreements.

2. More households are now exposed to institutional
credit risk. Note that households do not have limited
liability, but institutions have.

3. Regulatory oversight has become more complicated.

4. Velocity of collateral tied up may be slower this may
potentially affect the ability of Central Banks to add
liquidity in a crisis