On Tuesday, January 6, 2015 12:01:16 PM UTC-5, wrote:
wrote:
On Monday, January 5, 2015 2:07:38 PM UTC-5, wrote:
wrote:
F. George McDuffee wrote:

Why is there no government mandated "crash test" of financial products?
Why no evaluation of their safety and efficacy comparable to
FDA drug screening?

There are supposedly tests on how long banks can stand

It wasn't bank deposit money that was funding the flaky
financial products.

It depends upon what type of bank


No it doesn't depend on the type of bank.

Yes it does. (for example a community bank as opposed to an investment bank (as I said)

Only the type that take deposits are allowed to use deposit
money to fund investments.

Banks have routinely borrowed to conduct investment procedures:

"New York Community Bancorp Inc. soared nearly 6% on Wednesday after an analyst said its pending purchase of two commercial banks will make it more profitable.

Citigroup analyst Michael Diana raised his rating on the Westbury, L.I.-based bank, which has been unloved on Wall Street since it made a bad bet on interest rates last year. The bank borrowed to invest in mortgage-backed securities, which squeezed corporate profits when short-term rates rose."

-- http://www.crainsnewyork.com/article...-up-on-mergers

And since the govt is on the hook if a deposit taking facility fails

It wasn't there for Lehman Brothers.

there are regulations that make sure that the money is not used recklessly.

Regulations are never 100%.

The money that funded the reckless lending during the housing bubble
came from private investors.

As well as from companies, corporations and non-private sources such as non-profit institutions and governments and. For example, the government of Orange County famously lost money due to derivatives based investment.