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Call this a long quote-of-the-day, passed on by a reader who spotted it in Thursday's Financial Times. It's a great summary of what has gone so wrong, and why it didn't need to happen.

"This will come to be seen as the greatest regulatory failure in modern history. The degree of leverage that these institutions took on is indefensible. The average large securities firm was leveraged 27:1 in mid-2007. There were not regulated by any prudential supervisor. In effect, they regulated themselves. The lack of transparency was stunning. Many big lenders did not disclose off-balance-sheet risks. In some cases, they did not understand these risks themselves. More fundamentally, we allowed a second, huge financial system to develop outside the normal banking network … it was unregulated, not transparent and way too leveraged...

We will be climbing out of this financial hole for a long time. Three or four years may pass before normal lending functions are resumed. In the interim, our economy will not have access to all of the credit it needs and may underperform, at great cost to our society. All of this could have been prevented."

That's Roger Altman in the Sept. 18 edition of the Financial Times. Mr. Altman is the former Deputy Treasury Secretary, serving under President Bill Clinton and Treasury Secretary Robert Rubin. He is now chairman of Evercore Partners, a boutique investment bank. Oh, and he was co-head of investment banking at Lehman Brothers in 1980s.