Could bank regulators and FT´s finance sector journalists be suffering from damage in the ventromedial prefrontal cortex?

All major bank crises originate not from too much lending to what is perceived as risky, that never happens, but from too much lending to something perceived as absolutely not risky but that later becomes very risky, and this often because too much has been lent to it. This is a fact, and regulators, financial journalists and other experts know it. 

And yet, bank regulators set up capital requirements for banks that were much higher when the perceived risk were higher than when the perceived risk were lower, and thereby generated the incentives for too much lending to the latter… as a result of that since banks were allowed to leverage their equity more when doing so, banks could obtain a higher return on their equity when lending to what was officially deemed as absolutely not risky. 

And that not only caused the current crisis but it also keeps us from digging ourselves out of it, as it discriminates against all the “risky” small businesses and entrepreneurs we need to help us. 

And no matter how much I have written about it, the regulatory nannies don’t seem to get it, and keep on digging us, deeper and deeper, into what I have called “L’economia castrata”, that which so dangerously discriminates against what seems as “risky”. And one reason for it is that financial journalists, like those in FT, neither seem to get it. Why is this so? 

Well Malcolm Gladwell, in his book “Blink”, 2005, wrote that those who suffer from damage in the ventromedial prefrontal cortex, “can be highly intelligent and functional, but they lack judgment”, and that “causes a disconnect between what you know and what you do”. Could that be it?