I would nominate Corine Hegland’s piece in the National Journal as the most informative piece I have read on the financial crisis. A few excerpts:

Careful regulatory alterations take years, but financial institutions adapt within months.

In other words, if this is an OODA loop contest, don’t bet on the regulators.

In 2000, for example, the wholly unlikely Cassandras of this crisis, Fannie Mae and Freddie Mac, explicitly warned the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corp. — the agencies that regulate commercial banks and bank holding companies. Fannie said that the regulators’ proposed approach to the complex securities then emerging would result in capital requirements “so low as to create serious safety and soundness concerns,” which Freddie said would culminate in a “net reduction in the amount of capital in the banking system to protect against credit risk.”

“Freddie Mac would be pleased to assist the agencies by making available our expertise in mortgages and mortgage-backed securities,” the mortgage giant said.

As the author notes, Freddie and Fannie were hardly disinterested parties here. They had been enjoying an advantage over banks in that Freddie and Fannie had less stringent capital requirements, and arguably the GSE’s were just trying to stave off competition. However, in this case, self-interest for Freddie and Fannie coincided with the public interest.

I think that in previous blog posts I have complained about the fact that Freddie and Fannie did not blow the whistle against the rating agencies. But here we see them blowing the whistle well in advance, and going unheeded.

There is much, much more in the article.