Lombard Street. Walter Bagehot 1873

"The mercantile community will have been unusually fortunate if, during the period of rising [asset] prices, it has not made great mistakes. Such a period naturally excites the sanguine and the ardent; they fancy that the prosperity they see will last always, that it is only the beginning of a greater prosperity. They altogether overestimate the demand for the article they deal in, or the work they do. They all in their degree – and the ablest and the cleverest the most—work much more than they should, and trade far above their means."

"The fact is that the owners of savings, not finding in adequate quantities their usual kind of investments, rush into anything that promises speciously, and when they find these specious investments can be deposed of at a high profit, they rush into them all the more."

"The good times of too-high price almost always engender much fraud. All people are most credulous when they are most happy; and when much money has just been made, . . . . there is a happy opportunity for ingenious mendacity."

Plus ca change

See here for one analysis of the Fed's policy and Bagehot's prescription in Lombard Street of large loans at high rates to settle markets.