We simply have to face the fact that banking is fundamentally risky. As I decided long ago when working in banks, the reason we needed to wear dark suits and have classic buildings was to look conservative in order to offset the real riskiness of what we were doing. 

As Walter Bagehot said, it is "the ablest and cleverest the most" who in the fever of the boom "trade far above their means."

To make financial markets less vulnerable to their inevitable cycles, it is an essential responsibility of both private financial actors and government officials to study, develop and implement countercyclical approaches.

Bear Stearns had a credit crisis and neededa bailout.

The financial markets constantly have to relearn from the past.

It is five years since the 2006 peak of the great housing bubble and time to re-state the repetitive lessons of financial history. Our recent financial adventures are memorable, but will they be sufficiently remembered?

History proves that when government officials are faced with potential financial chaos, they always decide to intervene and support the market with a government bailout.

The bankruptcy of Lehman Brothers and the takover of Merrill Lynch by Bank of Americaoffer important lessons for policymakers.