Because when they went under they took all of their depositors money with them, and left their creditors in the lurch. This point is really why his thesis is so important.
I just want to say something about the banking crisis though, to get it off my chest - it will happen again, sooner or later. Even though new financial regulation will likely be introduced to prevent a crisis like this from happening again, over time institutions will develop ever more complex instruments and trading rooms to find a way around them - as they have done so historically - and make turkeys out of all of us, once again. The fundamental problem is the lack of political will to maintain oversight and keep regulation up-to-date.. politicians (and the rest of us) only really take notice when something goes badly wrong. How do we solve this problem?
I just want to say something about the banking crisis though, to get it off my chest - it will happen again, sooner or later. Even though new financial regulation will likely be introduced to prevent a crisis like this from happening again, over time institutions will develop ever more complex instruments and trading rooms to find a way around them - as they have done so historically - and make turkeys out of all of us, once again. The fundamental problem is the lack of political will to maintain oversight and keep regulation up-to-date.. politicians (and the rest of us) only really take notice when something goes badly wrong. How do we solve this problem?