IT IS hard to find a chink of light in the financial gloom looming over the US. Last week, US federal regulators seized control of IndyMac, one of the nation’s largest savings banks, after a crippling run on its deposits. Then the government announced plans to inject billions into the nation’s two largest mortgage-finance companies amid panic over their massive debts and dwindling reserves. Just a few years ago we were told that the unprecedented sophistication of modern financial engineering had systematically reduced market risks, making events of this kind all but impossible. So what happened?
In part, it is…
