>Could you not say the same kind of thing about mortgage backed securities, Fannie Mae etc?

Human based checks are easier to subvert than automated ones.

>We've had flash crashes

Which is exactly the problem that most banks and markets try to prevent. Any system that uses what other people are doing as a strong enough input is going to be susceptible to this to some degree. If you try to buy too many shares of something or for too disparate of a price compared to the market the bank will almost certainly kill your order. The exchange might kill it too. Depending on your contract with the bank and exchange they may kick your session for the day if you do it too much (once may be too much). The limits most banks place on what you can do mean that runaway algorithms can really only be a slow tug in one direction or the other which is no big deal.

"Human based checks are easier to subvert than automated ones."

I disagree. They're easily subvertable, but in different ways.

"Which is exactly the problem that most banks and markets try to prevent"

But they haven't succeeded so far. Further, as the saying goes, history never repeats itself, but it rhymes. It's all well and good doing all these automated checks based on past issues, that's not going to help with the next issue that isn't enough like the one before.

What are the different ways in easily subverting people versus machines?

A machine will hold you, strictly, to the letter of the law.

A person might consider giving you a bit of wiggle room on the exact letter of the law, but can also ensure you comply with the spirit of the rules.

At the end of the day, both systems are subject to issues. Computers are far more disciplined than humans, but that comes with a tradeoff of lack of introspection.