Financial regulators and central banks in the US, the UK and Europe, spooked by revelations emerging from the bankruptcy of little-known firms like First Brands (a producer of windshield wipers and brake pads) and Tricolor (an automobile loan provider), are being haunted of fears of a return to 2008.

To recall, at the centre of the 2008 financial crisis was a speculative frenzy involving opaque derivative instruments riding on mortgage loans, stretching from straight mortgage backed securities to synthetic derivatives and credit default swaps, among other “innovative” financial assets. That chain created an impression that rapidly rising credit risk was spread so thin across instruments and investors that the volume of loss for any individual player was small and systemic risk was minimal

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