Most important, what that calamity demonstrated was the true basis of the sector’s success: it was taking bigger and bigger risks, confecting financial products of greater and greater complexity (the profit margins of which may well be related to the difficulty for customers in understanding them), while being supported by a massive public safety net – in effect, a subsidy – consisting of official deposit insurance and the sure knowledge that the bigger that financial institutions became, the more that governments would consider them “too big to fail” and step in to rescue them if they ran
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