As the tenth anniversary of the collapse of Lehman Brothers approaches, articles are poring forth offering up the author’s take on the acute phase of the financial crisis the collapse triggered.  Not to be left out, Christine Lagarde, the Managing Director of the International Monetary Fund (IMF) posted her view of what happened and the lessons to be learned.

To no one’s surprise, it hews closely to the Committee to Save the Banks’ self-serving false narrative, but where she deviates from this narrative is very interesting.

At the core was financial innovation that vastly outpaced regulation and supervision. Financial institutions—particularly in the United States and Europe—went on a frenzy of reckless risk-taking. This included relying less on traditional deposits and more on short-term funding, dramatically lowering lending standards, pushing loans off balance sheets through murky securitizations, and more generally, shifting activity to the hidden corners of the financial sector that were subject to less regulatory oversight.

I had to read her statement about “murky securitizations” and “hidden corners of the financial sector” twice to realize Ms. Lagarde managed to stumble on to the fact the financial crisis occurred in all the opaque areas of the global financial system.

Some of the opaque corners like market based finance were only subject to disclosure regulations.  The failure of the government to require adequate disclosure of market based finance deals like subprime mortgage-backed securities meant the opacity of these deals prevented investors from understanding the risks hiding in these deals.

There were other opaque corners the financial crisis occurred in where there was regulation and supervision.  For example, all this regulation and supervision didn’t prevent financial institutions from going on a “frenzy of reckless risk-taking”.

It has taken a decade, but it is nice the IMF agrees opacity was at the core of the financial crisis.