We Never Learn

Said an analyst: "Risk, from where I sit,
Is consistent, however you slice it,
And our colleagues in banking,
For profit or ranking,
Consistently still underprice it."

Investment manager and commentator Barry Ritholtz, frustrated by the events unfolding between Greece and its creditors, poses the thoughtful question: "Who the f--- would lend a dime to these people?" In a rant posted on his blog, Mr. Ritholtz asserts that lenders are to blame when borrowers default for reasons that were well-known when the deal was done. We agree, but bankers themselves know that competition and the search for yield will, time and again, lead them to underprice risk, or wish it away.