First, we have learned again that markets depend on confidence, not just in the economic outlook of a firm or a country, but confidence in a core set of assumptions about how creditors and debtors will behave.In suggesting that we are learning these lessons over again, I don't think we should be too embarrassed. Everyone who works for me at the New York Fed knows that I am fond of passing along a saying that my Uncle Leonard picked up from one of his professors years ago that, "the secret of education is redundancy -- and you can say that again." My uncle also recently reminded me of the story of the man who was asked if he had learned from his mistakes. "Yes" he replied, "I have learned from my mistakes and now I can repeat them exactly."
Second, we have learned another lesson about the "commoditization" of risk.
Third, we have learned again the importance of stress testing as a risk management discipline, of the importance of going beyond value-at-risk estimates based on recent historic data.
Fourth, we have learned once again that lending with no initial or minimum haircut -- no minimum excess collateral -- is not without risks.
And finally, we are learning right now about the difference between risk appetites and risk management.
Who said this and when? For the answer, go here. (Hat tip to AleaBlog.com)