Part of the trouble with the economic crisis is that people and firms have an incentive to borrow short term to invest in long-term illiquid securities that are chancy and hard to value. If they can get them off their books and make a profit, the risk is no longer theirs.
I have a solution: Oblige anyone who creates long-term illiquid securities to get paid for their services in kind, so that a large fraction of their pay has to be in the stuff they traffic in. This would make them think twice or thrice about the honest risks of the product
Come to think of it, this is what happened to Merrill — they held on to big chunks of the stuff they sold, and suffered the fate of their clients. Maybe that’s the way it should work.