Unbelievable. The duty of regulation was to protect the economy and to protect the tax payer against having to bail out the banks. Regulation was there to protect us from the self interested behaviour of the bank bosses. It failed.
+++++ Too many people did not understand the risks to which they were being exposed, +++++The big players in the credit crunch did understand the risks. They played using a stragey to maximise their own expected wealth. They weren't playing for the good of the UK economy. For most bosses this straegy was successful and I suspect they would do the same again given the chance. Fred Godwin did ok, it is the UK tax payer that lost.
If he wants to study the mathematics he would do well to start with game theory before looking at modern financial theory and stochastic analysis. He needs to understand why people did what they did to understand what the *risks* actually were.
If Darling doesn't understand this there is nothing to stop it all happening again. He says that the bank boardrooms were the problem but surely that is exactly why we have regulation, to control problems which arise when the interests of the boardroom diverge from the interests of the tax payer.
I suspect Darling realises this and the current statements are motivated by a need to deny governmental responsiblity. It is unlikely that we will see a repeat of the disaster in the next 11 months, so who cares what happens after that.