The Financial Times' Gillian Tett quotes Lord Adair Turner, chairman of the U.K.'s all-purpose financial institution regulator, the Financial Services Authority:
"[T]he whole efficient market theory, Washington consensus, free market deregulation system" was so dominant that it was somewhat like a "religion." This gave rise to "regulatory capture through the intellectual zeitgeist," enabling the banking lobby to swell in size and power.
But now, he says, there has been "a very fundamental shock to the 'efficient market hypothesis' which has been in the DNA of the FSA and securities and banking regulators throughout the world."
Hence, "the idea that more complete markets were good and more liquid markets are definitionally good" is no longer trusted. "[This crisis] requires a very major reconstruct of the global financial regulatory system, [not] a minor adjustment," he concluded.
Good. Glad that's settled.