I really don't think Seymon has a real solution. Money managers who think they have a foolproof scheme will willingly bet their own money. Sure limiting compensation is a good thing, but not a cure. The best suggestion that I have seen is a requirement for the issuers of derivatives to maintain a reserve. Regular insurance is a kind of derivative and insurance companies are required to maintain a reserve to pay off policies. The same should be true of other kinds of derivatives. A reserve requirement slows down the explosion of derivatives, because eventually the total reserves are greater than the value of the underlying instrument. We might still have failures of individual firms, but total collapse of the financial system would be less likely.

There is still a need to put realism back into lending, because we are getting these crises every few years: loans to South American dictatorships, the savings and loan crisis, the Asian financial meltdown and the current mortgage and derivatives failure, all in the past 40 years.