This experience prompted the United States and other jurisdictions to revisit how supervision and regulation, including capital regulation, could have better contained that risk in both the bank and nonbank sectors. That is why capital levels today are strong.
When our empirical tests fail to yield expected results we do not take our theory back to the drawing board, but we fudge some explanation that we think might be plausible. These are not trivial matters. They lead economists to incorrect interpretations of economic motivations, transactions and processes, and, as a result, to policy recommendations that can be guaranteed to fail.