Professor Philip Lane:

I would not phrase it like that. That would imply regulators did the best they could and yet it was not enough. The situation here is that regulation was not done to the degree necessary. They could have adopted alternatives, as we are seeing this week with the debate about low loan-to-value ratios and other restrictions. Of course, all of that would have been very difficult politically. Can you imagine in 2004 or 2005 a central bank coming in big-time to say, "This has gone on too long and has gone too far and we are really going to stamp this out"?