The US Banks Got It Wrong …

It is easy to be a pundit sifting through the wreckage of the banking system with all the evidence at hand. All the warnings seem so obvious, all the mistakes seem so astounding, and all the motivations seem so wrong. Reality, experienced in the heat of the moment, was rather different. To be sure, warning signals surrounding the housing and financial markets were there, but they weren’t necessarily easy to interpret or act on. In the interest of full disclosure, I count myself amongst the group of bankers that got some of it right, but missed a whole lot of things – I certainly didn’t expect the crisis to play out with such fury, and I didn’t think that the safest, most mundane, nonmortgage assets would suffer. I think Goldman’s Blankfein is correct in stating that “[a]fter the fact, it is easy to be convinced that the signs were visible and compelling.”1