I disagree with the author's basic premise. While the article gives due credit to YV Reddy's foresight of 'applying brakes too early than too late', I find the complete lack of comparing the two situations in the right context, apalling! One needs to compare oranges with oranges, after all. The crux of the problem in the US economy is the government sponsored push towards increased home ownership. This push by the US state to over-promote homeownership has been the 'prodigal push to the stack of dominoes' which eventually lead to Fannie and Freddie becoming over aggresive mortgage lenders, to the over exposure to subprime borrowers, development of CDOs and all those other weapons of financial mass destruction. The important fact one needs to observe here is that the crux of the issue starts with government interferring in the working of the market. By artificially trying to boost homeownership, the government essentially lets loose excessive corporate risk taking - this is essentially what happened. Like one of the bank CEO's mentioned in the interview - "All those exotic structures like CDO and securtization are a very tiny part of our banking system. So a lot of the temptations didn't exist." Luckily, it seems that the Indian State has not got behind the 'increasing home ownership' bandwagon. Housing market has not come under pressure from the government to boost home ownership and therefore no apparent need to take excessive risks by creating money out of thin air using CDOs and other weapons of mass financial destruction. Rothbard says the 'bust' in the business cycle is usually causally linked to the earlier government generated 'boom'. The market economy is self correcting and will quickly eliminate the earlier government generated errors in investment, unless the process of adjustment is interfered with by government policies. I think it would incorrect to say Indian banks are 'saved' due to tight regulation. http://anand-mind-spark.blogspot.com