Thinking Further About Wall Street Looting

I believe that deregulation led to looting, in the Akeloff/Romer sense, that people at Wall Street firms were overpaid relative to the true, properly risk reserved earnings of the business.

The problem is that the mechanism is more complicated than the sort that they and later Bill Black discussed, that of CEO level pilfering (well, save maybe in the case of the Fuld and Gregory at Lehman, although they were badly self-deluded as opposed to criminal in intent. I personally think they were criminal in action, that the accounting was fraudulent, but they somehow rationalized it).

What I believe happened is this