Why the innovation process fail and cause the financial Crisis?

When i heard the reasoning of Bruce Nussbaum , the "Innovation Guru" from Businessweek comment about the relationship of innovation with the actual financial crisis, when he said:
"the innovation process was flawed"
i began to think:
Does he blame the lack of correct implementation of Innovation process in the financial systems?
Who are the institutions that incorrectly implemented those processes?
Is he right with his statement?
What is a correct innovation process?
how to commercialize innovation in financial market?

As we know, Bruce background is in design, he has been awarded from the Industrial Designers association of America and is a writer that present key questions in the Innovation area,
his question for this topic was: "Have the Numerati caused the crisis on Wall Street by innovating new financial products based on bad models and poor process?"

We are going to get in deep into this statement and try to offer a better understanding of the reallity:

The Numerati, as Stephen Baker describes are a group of Mathematician, scientist and engineers capable of understand, filter and analyze all the info generated in internet for marketing purpose.
These people do this by looking for patterns in human behaviour and then they can quantify the information.

Reading "The Numerati" i found 2 great examples of companies generated by Numerati, one the globally known "GOOGLE" and the other, also known in the financial sector, "Fair Isaac Corporation".

These companies have several similarities:
+His founders are engineers /mathematicians
+His founders are from Standford
+They take advantage of the information an convert in a profitable business.

im going to focus in FAIR ISAAC CORPORATION(FIC):
They developed the widely used credit score model call "FICO SCORE": This is used for the 90% of all the institutions in United States, and offer to the banks an statistical tool for take their credit decisions.

I have seen that Equifax, TransUnion ans Experian (largest credit bureaus in U.S), even if they have their own scheme for calculating the credit they use the FICO.

So, returning to the question of Bruce , lets see the performance of FIC in the past 2 years:

As we see here, there is a big drop in December of 2007, so i looked to the news of the company in that time and i found this:

In October 31 of 2007, the stocks gain their maximum to $37.46 this was attributed to the increase of usage of their Myfico.com service. By other side, their business havent received any decline from the Mortgage markets, these markets represents the 10% of their revenue.

Then, in december 10 of 2007, the company added 2 sits on their board because they began to feel the consequences of the Mortgage market meltdown, and they were preparing for problems in the future.

Then the company decided to make some changes to the FICO system for suit the incoming crisis. This was an strategy to mantain the monopoly because 3 lender companies created a system similar to FICO in 2006 call VantagePoint.

In January of 2008 they anounce that their earnings will fall because of the Mortgage crisis.

All these combined made FIC to drop his stock value more than 25% in 2 months.

But, all this analysis give us an approach to answer the question to Nussbaum?

i dont think so,  we have to continue to research what really happen...

but remembering the commentaries of Alabama senator, Richard Shelby about the "Mother of all the Bailouts " 

He appoints that this bailout is a reward for WallStreet, because they were:

-Weakly regulated

-They made Bad mistakes

-They were Greedy

so, we have to ask a new question: Does the american regulatory system is capable of managing and controlling the innovations at Wall Street an Main Street ?