Banking became, once again, exciting and high paying. Much of the seeming success during this period, according to Krugman, was an illusion; and the business model of banking of this period had actually threatened the stability of the real sector. Krugman’s surmise accordingly is that the bank street should be kept dull in order to keep the main street safe. 5.
The boring banking thesis found an echo in other influential voices. In a speech last month that attracted wide notice, Mervyn King, Governor of the Bank of England addressed the moral hazard issue: why were banks willing to take risks that proved so damaging to themselves and the rest of the economy?