A financial  6  BIS Review 38/2008  sector that generates on the one hand huge revenues for some of its participants but on the other hand regular crises with high costs for non-participants, is in my view ripe for a hard look at the balance of existing incentives.
The first issue that I would like to stress is the obvious underestimation by financial actors and supervisors of the actual degree of leverage in the financial system. This leverage is not only generated by traditional banking activities but also by highly leveraged institutions, SIVs, conduits, LBO-financed firms etc.