Five reasons financial disasters are hard to avoid

An analysis by regulators, academics, and investors at the London School of Economics identified five key reasons why financial disasters are hard to avoid: 1) Riskier activities shifting to less regulated areas like investment funds; 2) Increased similarity among major banks; 3) Evolving business models challenging regulatory assumptions; 4) Fundamental weaknesses like debt bias and limited liability structures; 5) Political pressure for bailouts despite post-crisis reforms. The group concluded that old problems and new dangers create conditions ripe for future turbulence in the financial system.Photo: REUTERS