Who was asleep while financial markets ran amok? On Freddie and Fannie, the Bush Administration says, not us. Read the whole timeline. Greg Mankiw, who is mentioned in the statement, provided the pointer.

Is Henry Paulson a hero? Not to Luigi Zingales. Zingales articulates a concern that has been near the surface of some of my own recent posts, which is that the government officials making these decisions are seeing things from the perspective of Wall Street, which is kind of like seeing the auto industry from a Detroit viewpoint or seeing the movie industry from a Hollywood viewpoint or seeing elections from a Washington viewpoint. Tyler Cowen found this one.

Tyler also dug up an old blog post from an investment banker who used the pseudonym Mindles H. Drek. He points out that the expanded use of derivatives was largely a response to regulation. He points out, en passant, that the credit rating agencies’ role in financial markets is driven by regulators, as well. I’ve talked about the credit rating agencies in recent posts. I’ll talk about the role of derivatives in another post, soon.

Brad DeLong has a long post. It is worth reading to understand his point of view. Basically, he throws the kitchen sink of market imperfections at financial markets–moral hazard, adverse selection, multiple equilibria, and so on, and then says that we should never again allow private decisions to be made without wise technocrats like himself overseeing things. He and I could have a long, long debate. Thanks to Mark Thoma for the pointer.