Early warning system for systemic risk a 'huge challenge', say experts

warning-sign

How did regulators fail to see that the US mortgage market was on the brink of a meltdown in 2007? Why did they not react to the message of ballooning spreads in the credit default swap (CDS) market that some of the largest financial firms were edging towards collapse? And why did those regulators act so differently when those collapses occurred – at Bear Stearns, Lehman Brothers, Washington Mutual and American International Group – treating shareholders and bond investors inconsistently and

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