> Dealing with systematic risk is precisely where the regulators should be coming in because it's outside the capability of any individual institution to deal with it.
Actually, regulators are quite good at creating systemic risk.
The widespread ownership of Fannie and Freddie stock by banks, which killed their balance sheets when Fannie and Freddie went down, came from regulation. So did the popularity of securitized mortgages and "insurance". (Regulators required insurance, AIG's fit the bill, and everything was great, until it wasn.t)
And, let's not forget that Wells Fargo got hammered because it didn't go along with the regulators' "requests" to do dumb home loans.
Actually, regulators are quite good at creating systemic risk.
The widespread ownership of Fannie and Freddie stock by banks, which killed their balance sheets when Fannie and Freddie went down, came from regulation. So did the popularity of securitized mortgages and "insurance". (Regulators required insurance, AIG's fit the bill, and everything was great, until it wasn.t)
And, let's not forget that Wells Fargo got hammered because it didn't go along with the regulators' "requests" to do dumb home loans.