There's a great piece in the new MIT Technology Review [free reg. req'd], "The Blow-Up," on the role of quants in this summer's credit meltdown:
For Richard Bookstaber, a quant who has managed hedge funds and risk for companies like Salomon Brothers and Morgan Stanley, the August downturn proved that concerns he'd long harbored were well founded.... Today, he is very worried about the tools and the methods of the quants. In particular, he frets about complexity and what he calls "tight coupling," an engineer's term for systems in which small errors can compound quickly, as they do in nuclear plants. The quants' tools, he feels, have became so complicated that they have escaped their creators. "We have gotten to the point where even professionals may not understand the instruments," he says.
