How hard was that?

So here’s a question: what country has, at the moment, one of the strongest banking systems in the world?

Everyone who said Lebanon, pat yourself on the back.

Today’s LA Times profiles Riad Toufic Salame, the Lebanese counterpart to Ben Bernanke. Salame made the unpopular (at the time) decision in 2005 to forbid Lebanese banks to invest in mortgage-backed securities.

In 2005, he defied pressure from the Lebanese business community and bucked international trends to issue what now looks like a prophetic decree: a blanket order barring any bank in his country from investing in mortgage-backed securities, which contributed to the most dramatic collapse of financial institutions since the Great Depression.

So as major banks in America and Europe were shuttered or partly nationalized and thousands of people in the U.S. financial sector were laid off, Lebanon’s banks had one of their best years ever.

Billions in cash continue to pour in to the relative safety of Lebanese savings accounts, with comfy but not extravagant yields of 6%. A nation shunned for years as the quintessential failed state has become a pretty safe bet, or as safe a bet as investors are likely to find in this climate.

Here’s the thing: lots of people knew that mortgage-backed securities were crap.

Sadly, none of them in this country had the power to do anything about it.

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