S.E.C. Concedes Oversight Flaws Fueled Collapse

As reported in the Times today. My first thought was, "REALLY? You figured that out all on your own?" Then I came to this quote near the bottom of the article:

In 2002, the European Union threatened to impose its own rules on the foreign subsidiaries of the American investment banks. But there was a loophole: if the American companies were subject to the same kind of oversight as their European counterparts, then they would not be subject to the European rules. The loophole would require the commission to figure out a way to supervise the holding companies of the investment banks.

The loophole they found was voluntary regulation: basically, the banks can "opt in" to oversight. Yeah, that's going to work! But ultimately, I think that it says a great deal about where the U.S financial industry stands in terms of Europe's economic power in the world: American companies had to dig around to find ways to pay lip service to the E.U.'s rules and regulation... and then, of course, wound up screwing themselves (and all of us) when they succeeded.