One More Mess

To the Editor:

Re “High Finance Works, but Only for a Chosen Few” [Sept. 24]:

Nicholas von Hoffman’s analysis of Wall Street’s mishandling of the subprime mortgage crisis was right on target.

But in citing only three of the times in the last 25 years that our capital markets flirted with disaster (the savings and loan failure, the dot-com crash and the subprime mortgage mess) Mr. von Hoffman forgot to mention perhaps the most significant of all—the meltdown of the hedge fund Long Term Capital Management.

Hugely overcompensated “quants” pushed their risk-minimizing models so far that eventually they appeared to believe they had eliminated risk altogether.

That’s never, ever possible. If something bad can happen, no matter how small its probability, sooner or later it will happen.

What happened with L.T.C.M. nearly took the world’s financial system with it. Whether we’ve learned anything from these fiascoes is questionable.

Sydney Levine
Manhattan