Crocodilian

3 Things America Needs to Do to Get the Economy Back on Track

"Cultural changes at our banks and securities firms are required."

Its not about "culture" -- its about "structure". If they're permitted to sell risky debt, they _will_ sell risky debt. Think of hospitals. There's long been a problem of people hooking up the the wrong hose to the wrong plug-- if the Oxygen mask gets plugged into the CO2 outlet, you have a problem.

There are two approaches to the solution: training-- get everyone to recognize the deadly danger.

Or design: make sure the Oxygen tube connector doesn't fit into the CO2 port.

Solutions that affect design, which make it impossible to make mistakes, are preferable. That's what we did after the crash: created three categories of banking institutions
investment banks
commercial banks
savings banks

Each was permitted to engage in a limited range of transactions, with a limited leverage, and limited counter-parties.

There were efficiency costs to this arrangement, but "by design" it prevented the nightmare chimeras we're trying to control today.