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It's a gamble along the lines of "I bet I can invest money better than the bank". Often turns out the bank can invest money better. I wonder who convinced them to invest, er, gamble.


In the short term I'm sure it's true. But in the long term, banks have a major advantage over us mortals: they get bailed out. So I'd imagine they tend to win in the end.


If the bank's so smart at investing, why did they give the money to someone who was going to lose it all on the stockmarket? :)


Because the borrower had good collateral, and this was good business for the bank. It is what banks are supposed to do.

Bottom line: I think this is not a good case why you need more regulation of banks. It may be a case why you need more regulation of universities.


Before we discuss more regulation of either banks or universities, perhaps we should first consider the extent to which we need more regulation of regulation.


Indeed. That is perhaps the first priority.

Too often the approach "this didn't work out, so we need more of it".




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