Who dropped the ball? Risk managers? Traders? Executives? Regulators? Unfortunately, the answer isn't simple.One question I'm regularly fielding from friends and family is "how did this happen?" I guess since Wall Street & Technology covers the industry, they figure I must know what happened. I wish it were that simple.

There has been a lot of finger pointing going on. Blame the lax regulators. Blame the greedy executives. Blame the quants. Blame Bush. Blame the mortgage lenders. In times like this, everyone wants to point to a single culprit. It's easy for the mind to process and is easier emotionally (focus all of your anger and exasperation at one target, and it is much easier to vent).

Unfortunately, it isn't that simple or clean. There is plenty of blame to go around and regulators, politicians, traders, quants and executives all have some responsibility in this mess. However, as this New York Times blogger points out, a good portion of the blame should be given to quants who relied (or who were pressured to rely) on overly optimistic data who ultimately doomed the industry. Garbage in does equal garbage out.