These are areas where future practical improvements must be made. Underwriting standards As you know, the trigger for the turbulence was subprime mortgage lending, much of which took place outside the regulated banking sector. A large part of this lending was based on weak underwriting standards.
Weak underwriting has long been the bane of banks and banking systems; the difference in this case was the rapid and global transmission of risk through the use of securitisation. Problems at banks are all too often caused by the failure to adhere to basic risk management principles, especially when new products and markets come into play.