The banks had almost ceased to be lenders. They were distracted by and infested with financial high flyers and used their basic businesses to issue premium corporate paper, with which they bought higher-yield offerings of increasingly high risk. They merged or became one-stop financial shops, absorbing investment banks, insurance companies and other financial service-providers which had different corporate cultures. Even the legendary banking nationalities — the Swiss, the Dutch and the Scots — largely lost their way. The regulators, who had all the powers they needed to avoid the crisis, predictably demanded more authority as a reward for having failed so completely to use the powers they already possessed. 

This highlights the two fundamental problems that have created and aggravated the financial crisis. Since economics is half psychology and half Year Three maths, the crisis has demoralised America. First, no one saw the crisis coming, except the silent manipulators Lewis writes about. Second, those few professors and eccentric investors who spoke out were considered too erratic or obscure to command much prior notice.

In terrible policy failures and crises of the past, such as the mistakes of appeasement in the Thirties there were serious people such as Winston Churchill and Charles de Gaulle who were there to lead their countries when the errors they had decried were exposed. The gigantic follies that led to the financial meltdown should have been obvious enough to arouse serious dissent, but didn't. This reveals something deeply disconcerting about the American political and business elite.

Some people detected some aspects of the approaching crisis. Even I was shrieking from the rooftops for years about the $800 billion annual US current account deficit. But again, apart from a few technical financial wizards identified in Lewis's book, almost no one predicted the tsunami of sub-prime mortgage defaults. I had dealt with many of the main lending banks and almost all of the leading investment banks in New York and London. I was never impressed with the service they provided or the quality of their advice. They were a cartel in New York, and in London a little back-scratching society at the feet of the Governor of the Bank of England.

Very few of them had any loyalty to the client. They lacked any real notion of relationship banking and just led those they advised to their habitual sources of capital, preceded by their corporate wallets. They gouged the offering price of the new debt and share issues by short-selling their clients' stock to depress the issue price, assuring a pop for their financial partners and their own trading accounts as soon as the issue came through the window.

For decades, the chief objective of the financial industry has been not to make good deals but to make many deals, take their fat fees, and to hell with the public. The regulators could have tightened some of these regulations but apparently never considered it. Greed compounded the problem, but was not its origin.