Many had expressed forebodings about the build-up of risks and leverage ahead of the crisis – and I would count both the FSF, BIS and the FSA in that number – but the weaknesses of risk management at major banks were so serious and pervasive as to defy even the more pessimists.
Authorities have had to re-examine their fundamental assumptions about how the financial system works, and draw conclusions for how to reshape regulation. Lord Turner’s review does an excellent job at both of these tasks.