3  For a more comprehensive treatment of the causes and results of the failure of investors to exercise due diligence, refer to my recent speech to the Institute of International Bankers, in which I noted that the episode underscores the importance of the Russian proverb: “Trust but verify” (Randall S. Kroszner, 2007, “Recent Events in Financial Markets,” speech delivered at the Institute of International Bankers Annual Breakfast Dialogue, October 22).
4  The estimates in this paragraph are based on analysis of loan-level data from LoanPerformance by Federal Reserve Board staff. 2  BIS Review 126/2007  over the preceding three years.