Calvin Trillin’s op-ed in the NY Times is probably right, although it pretends to be humorous. To some extent, the problem is all those smart people on Wall Street. It reminds me of the old Jonathan Winters routine in which he plays a senator; when they ask him about reports that he is inept, he replies that it’s all those “ept” people that we have to worry about. When both the bankers and the regulators were somewhat inept, we didn’t have to worry too much, but when the bankers became so much smarter than the regulators, we ran into huge problems. Or as Trillin says, when the traders became so much smarter than their bosses, so that the bosses at the big banks did not understand what their subordinates were doing, except that they were all getting insanely rich.
It’s the same joke they told about law school: the A students because professors, the B students became judges, and the C students became rich. It’s as if the A students have left the classroom for the courtroom, where they are winning huge judgments for undeserving plaintiffs.