With the banks imploding, it's refreshing to read the confession of a risk manager in this Week's Economist.

It's anonymous and we don't know which bank. But the insights are worth reading and re-reading because they tell us how smart people can be so stupid, and ignored all the advance warnings, particularly with the growth of junk like collateralized debt obligations which were bundles of risky debt, including mortgages, bonds backed by some of the riskiest home loans in the subprime market, credit card debt, loans to private equity, all parcelled up into neat little sections, or tranches that earned the banks obscene amounts of money.

But the most striking part of these revelations is where he talks about the pressure that was coming on risk managers to approve transactions. The banks wanted the money, and to hell with the risk.

"The pressure on the risk department to keep up and approve transactions was immense. Psychology played a big part. The risk department had a separate reporting line to the board to preserve its independence. This had been reinforced by the regulators who believed it was essential for objective risk analysis and assessment. However, this separation hurt our relationship with the bankers and traders we were supposed to monitor.

"In their eyes, we were not earning money for the bank. Worse, we had the power to say no and therefore prevent business from being done. Traders saw us as obstructive and a hindrance to their ability to earn higher bonuses. They did not take kindly to this. Sometimes the relationship between the risk department and the business lines ended in arguments. I often had calls from my own risk managers forewarning me that a senior trader was about to call me to complain about a declined transaction. Most of the time the business line would simply not take no for an answer, especially if the profits were big enough. We, of course, were suspicious, because bigger margins usually meant higher risk. Criticisms that we were being "non-commercial", "unconstructive" and "obstinate" were not uncommon. It has to be said that the risk department did not always help its cause. Our risk managers, although they had strong analytical skills, were not necessarily good communicators and salesmen. Tactfully explaining why we said no was not our forte. Traders were often exasperated as much by how they were told as by what they were told.

"At the root of it all, however, was-and still is-a deeply ingrained flaw in the decision-making process. In contrast to the law, where two sides make an equal-and-opposite argument that is fairly judged, in banks there is always a bias towards one side of the argument. The business line was more focused on getting a transaction approved than on identifying the risks in what it was proposing. The risk factors were a small part of the presentation and always 'mitigated'. This made it hard to discourage transactions. If a risk manager said no, he was immediately on a collision course with the business line. The risk thinking therefore leaned towards giving the benefit of the doubt to the risk-takers.

Collective common sense suffered as a result. Often in meetings, our gut reactions as risk managers were negative. But it was difficult to come up with hard-and-fast arguments for why you should decline a transaction, especially when you were sitting opposite a team that had worked for weeks on a proposal, which you had received an hour before the meeting started. In the end, with pressure for earnings and a calm market environment, we reluctantly agreed to marginal transactions."

Good risk managers, he says, need to be perceived like good goal keepers. The trouble is the banks were putting pressure on them to let the ball go through. And that's unlikely to change.