Good financial innovation ...... has been lacking because it’s very difficult for anyone to own its beneficial effects; it’s a public good. By contrast, the gains from “bad” financial innovation - overly complex mortgage derivatives - are more appropriable. So we get more of it.
The whole thing is worth a look.
Funny, today none of the banks look like they're prepared to lend to each other because none of them has a clue about how over-extended the others are. Or even how over-extended they are themselves.