Editor's page.

• Author: Marshall, Jeffrey

Our cover story, "Lessons from the Abyss," is one of the most ambitious articles the magazine has undertaken in recent years. There isn't a bigger subject in business today, and the credit market debacle has tendrils reaching into almost every corner of financial market practices.

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It's impossible for a magazine with a monthly cycle to stay on top of such a story, and breaking news really isn't the province of Financial Executive. But members of the magazine's editorial board--all FEI members--spoke out in a recent conference call, urging us to try to make sense of the market meltdown.

Writer Gregory J. Millman and I strove to focus our reporting and writing less on what has been happening than what it means, especially with regard to risk management. It goes without saying that the risk modeling done by scores of financial firms was hugely deficient. That blame lies with the firms themselves, but there's no question that markets around the world have become so cacophonous that it can be hard to hear the right messages.

More than that, as the story points out, the ongoing market nightmare is the result of a lot of forces that will require some kind of attention, among them: lack of transparency, chasing after yield, over-reliance on apparently inflated credit ratings, insufficient capital to backstop exotic securities with no market history and a herd mentality as thunderous as the bulls running at Pamplona. New regulation has been proposed, though its final shape isn't yet clear.

But, as the story notes, the credit woes can really be traced back to regulatory policies that sought to put as many people into homes as possible. Over time, and with home prices on what seemed to be an inexorable climb, credit standards went out the window; the securities that...