I just finished Krugman's "A Return to Depression Economics" where he provides a nice college course in ever changing dynamics of banks---to their core weakness----speculation and over-extension.

In the book he reveals Geithner's June 2008 speech to the insider's club known officially as Economic Club of New York where he was discussing the damage due to the housing bubble. What Geithner revealed was essentially how UNREGULATED the US and International banking system had become growing to about $4T of the $10T banking system. Meaning after learning through grief, hardship and plausibly a World War how important it was to regulate "other people's money" and essentially regulate stability we allowed what became known as the "shadow banking system" of hedge funds, asset backed commercial paper, structured investment vehicles, auction rate preferred securities, tender options and variable rate notes, assets financed over night in something called triparty repos et cetera was essentially 40% of the credit market and supporting a $14T economy.

Now as this world essentially was acting as banks even though they weren't chartered and regulated to hold cash reserves were unable to respond orderly to what was nothing else as bank runs. Essentially they set up a toxic situation where they  used a fake insurance scam to securitize the system of speculating on the US housing market.

How far this accelerated the dollar is still unknown but essentially we might be 2 or 3 times upside against actual value. The thing is there were warnings in the Bush Administration and I believe the real person who knows is Paul O'Neil who left in 2003 where one can even go back how the Bush Administration blocked state-level efforts to impose oversight in the subprime market.

The whole thing appears to have real international implications as the US basically underwrote its own deficit through international monetary systems where it seems that Goldman, JP, AIG and Citigroup are steeped. This thing is very deep and I wonder how deep.