BIS reviews the crisis and the policy responses in its Annual Report 2008-09. As always, it is a lucid read with graphs and charts.
The failures that caused the crisis were broad-based. They included macroeconomic factors, such as large and persistent global current account imbalances and low real interest rates over a protracted period. And they also included microeconomic factors, such as flawed systems for measuring and managing risk, misaligned incentives and inadequate corporate governance at financial institutions. The result was a build-up of excessive leverage in the financial sector and in the household sector in a number of countries. Neither market discipline nor regulation and supervision were able to prevent these developments.