In addition, deficiencies in financial institutions’ risk-management models and the sad role played by credit rating agencies, wrongly signalling decreasing risk during the boom, amplified the tendency towards excessive leverage and procyclical lending behaviour.
As regards procyclical behaviour and the shortening of horizons, I see a clear analogy with the area of fiscal policy, where in the absence of appropriate rules there is also a strong incentive for procyclical behaviour, especially during economic booms.