Nobel laureate Joseph Stiglitz succinctly addresses the causes of the financial crisis and makes recommendations for preventing a recurrence here. He does not propose solutions to the current mess.
Stiglitz says the Fed created a "flood of liquidity" and failed in its duty to impose and enforce prudential regulations on those involved in mortgage lending. This led to excessive leverage and a "pyramid scheme." The so-called "innovations" implemented by the financial industry were essentially just obfuscation of leverage and risk (as I had written here). He follows with additional criticisms of the financial industry and recommends 6 reforms:
1. Realign incentives in executive compensation systems at financial institutions.
2. Create a "financial product safety commission."
3. Create a "financial systems stability commission."
4. Impose other "speed bump" regulations to prevent too-rapid growth of borrowing.
5. Adopt better consumer lending laws, including laws that prevent predatory lending.
6. Enact better competition laws.
Thanks to Christine for the heads up.