Editorial Board
How to Fix Our Financial Early-Warning System
Markets are again showing signs of excess. Regulators need to know where the risks are concentrated.
Six years after the 2008 crisis, U.S. financial markets are again displaying signs of excess. Stocks keep hitting new highs despite a lackluster economy. Investors are lending money on extremely easy terms to all kinds of risky borrowers, from highly leveraged companies to car buyers with questionable ability to pay.
It would be comforting to think that this time around, regulators are on it -- that they know where the risks are concentrated and are capable of acting to protect the broader economy. Sadly, that's not the case.