Another of the ways I make my bike ride to work more dangerous is listening to podcasts from Russ Roberts' Econtalk. Roberts is a great interviewer, and sounds quite boyish. The best of the recent ones was one with Charles Calomiris, about the banking crisis. Calomiris manages to talk at great speed with complete clarity on a complex topic, barely letting the usually gabby Roberts get a word in edgewise. "All I learned about economics I learned from reading blogs" isn't completely true of me, but has a lot of truth in it--and most economics books I've read are by people who blog as well. Despite these less than impressive credentials, I think I understood Calomiris pretty well.
Moral hazard is behind a lot of what goes wrong, not just in banking, but in healthcare as well. Build a guardrail, and people not only get closer to the precipice than they would otherwise, they lean on it, then build their houses on it. Everyone is enraged when it breaks and everyone falls in. Don't blame Calomiris for this metaphor--it's all my own.
Calomiris is dismissive of securitization and "originate and distribute" as the causes, and is persuasive on that score.
The interview is worth a listen, maybe two--I think it covers a lot of issues very clearly. The Richard Posner interview on the same topic a few weeks later was quite otherwise. Though I'm a big fan (I love Sex and Reason), I thought he was dull and a bit of a blowhard--I'm not persuade he's the right person to go to on this topic. Calomiris clearly is. I'll tell you what I learned about the FDIC some other time.