I was asked to give a presentation on the financial crisis. I didn’t want to just do the same old song and dance, so I came up with….The financial crisis will produce a battle
And that is, “What will be the narrative?”
They will tell you that the failure was all moral
But I say it was mostly cognitive

The loans a bank regrets are what I call bad bets.
They made a bigger mess with leverage to excess.
And when they spread their woes they fell like dominoes.
They spoiled each others’ fun with new-style banking runs.

What made it all go wrong?
Just listen to my song.

Capital regulations were sure arbitraged
Bank protection against risk was just a mirage
With securitization, requirements did fall.
With a SIV a bank needed no equity at all.

Capital regulations were unsafe and unsound.
Their perverse implications brought the whole system down.


There is a dance that goes with it, but it’s hard to dance holding a piece of paper. The thing is, you need the paper to help you remember the lyrics. I guess that’s why professionals have these things called “rehearsals.”

After suffering through that, the audience was relieved that the rest of my presentation was just a talk.