second feature of these risks, though, was that systemwide adverse events would be necessary to trigger them: to cause the senior securities to default, mortgages across the country would have to default, suggesting widespread household distress. Similarly, funding would dry up for well-diversified, large banks only if there was a systemwide scare. A third feature, perhaps the most important one from society's perspective, is that these risks are very costly when they are realized, so they should not be ignored despite their low probability. Unfortunately, these very features of systemic tail
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ignored or counted upon: catastrophe brings in the feds. they may have needed to ensure systemic risk to be able to safely "ignore"…or just count on being able to run the racket for 4 or 5 years to collect enough to retire even if followed by firm's or economy's collapse.
