Somewhat appropriately, today’s New York Times includes a longer-than-usual Op-Ed on the many and varied failings of Wall Street, the SEC, and a financial system that has gotten amazingly screwed up. In a word (well two words): misaligned incentives.

The Madoff scandal echoes a deeper absence inside our financial system, which has been undermined not merely by bad behavior but by the lack of checks and balances to discourage it. “Greed” doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character as we are lust and envy. The fixable problem isn’t the greed of the few but the misaligned interests of the many.

Read on and be disgusted. Then read this for a possible path out.

Hat Tip, my favorite financial blogger: Barry Ritholtz’s The Big Picture.