Implode-o-Meter News - Bankers have not learnt the lessons of the Great Crash

... financiers' greed alone didn't cause all this. Economists had not allowed for people's â€˜honest misjudgments'; central bankers had failed to spot the symptoms of trouble in the years of prosperity and kept interest rates so low that people lost their understanding of risk; politicians had mistaken steady growth for permanent stability, boasting about an end to boom and bust.
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Citizens have to be protected from the risks that banks always want to take with their money. â€˜This form of alchemy,' says King, â€˜should not be outlawed, but it should be priced.' When the Bank of England was lender of last resort in the 19th century, it worked quite well because 30 per cent of the banks' assets were short-term government securities which the Bank could access as collateral.
'In 2006, before the crash began, that figure had fallen to less than one per cent. So when a bank went wrong, it was utterly bust and the burden fell upon everyone.

Relevant:

Bankers have not learnt the lessons of the Great Crash - Mervyn King