Mortgage securitization was considered a good idea a few years ago due to its ability to spread out risk. It is today considered as the cause of the financial crisis – making renegotiating mortgage terms impossible. This is a testimony that product ideas that are tried in the marketplace for only a few years are not proven solutions. It takes time for a bomb to explode.
Because of competition there is immense pressure to get the product to market fast. This is true with pharmaceutical as well as financial products. Without a government agency as a gate keeper, society will be the lab mouse of innovative products. Some products are safe to use the public as lab mouse – remember the days when Windows crash daily? But others will have severe consequences, such as death or global financial crisis. To what extend new products should be regulated? What’s the right balance between safety and efficiency?