Over the last three years, I have read countless articles diagnosing the causes of the financial crisis. While each had a particular angle, virtually all cited the appalling regulation of the financial sector as the main driver behind the crisis. Banks experimented in poorly understood new financial products; they became over-leveraged; and generally failed to properly manage risk. Rather than take the full consequences for their poor decisions, banks foisted their losses onto the public sector.
These articles also emphasise the near universal consensus that financial systems need to be more closely regulated. Yet nothing has happened. Today, banks are operating under virtually the same regulatory regimes that existed during the bubble years.
Why have politicians across the world failed to act? I don't have an answer. I don't want to drift into the murky world of conspiracy theories, but the financial system does appear to have a strange hold over policy makers.