"... if so, what does that say about the quality of bank management?"

You mean the same bank management that was lending hundreds of thousands of dollars to people with no money down?

And no proof of even an income?

And no proof of even citizenship?

You mean THOSE bank managers?

Is the quality of these bankers still a matter of serious debate?

On regulatory cooperation and having the IMF work as an early warning system:

1. With regulatory cooperation (and particularly with the emphasis on harmonization), isn't there a risk of regulatory homogenization? And if the harmonized regulation is wrong, doesn't that increase systemic risk? Arguably, this happened with Basel II -- which the SEC adopted as part of its CSE program and which resulted in US investment banks having the same catastrophic leverage ratios as European commercial banks (while the Fed, which ignored Basel II requirements, kept US commercial bank leverage ratios at much lower levels).

2. And relatedly, given that pretty much everyone (Fed, SEC, UK FSA, ECB, etc. etc., with the possible and debatable exception of the CFTC's Brooksley Born) misunderstood the risks posed by the securitized subprime market, what makes anyone think IMF staffers will be able to do better, no matter how much money they are given? The amazing thing about the current crisis is that so many regulators got it wrong, despite widely varying regulatory philosophies and regulatory structures. This was fundamentally a problem with the zeitgeist. And the IMF isn't going to be above any future problematic zeitgeists.

I do get that, but regulation will always fail at something ... it isn't as if the industry did better, and many of those shareholders and bankers had every incentive to solve the problem.

And given the risks of global contagion, I'd consider some harmonization ... and ensuing failure to be worth it, but I take the point, MDF.

My fear exactly. Even the people with a financial incentive to get it right got it wrong. It wasn't just a failure of regulation -- though regulatory failure contributed to it. Fixing the regulatory system is certainly a good thing to do, but no regulatory structure will be able to avoid getting "it" wrong when everyone else is getting it wrong. Regulators second-guess themselves constantly, because their information is so constrained and because of pressure from interest groups, Congress, etc. (all supremely confident that the regulator doesn't know what it is talking about). In the end, regulators will bend. They always do.

The extent of the mess is turning me into a Minsky acolyte.