Few people would disagree that Wall Street lenders, hedge fund and investment banks got a little giddy during the credit boom, extending loans left and right and buying up risky securities linked to dodgy home mortgages.

Ned

The result was, in the now-famous words of U.S. President George W. Bush: “Wall Street got drunk. It got drunk–that’s one of the reasons I asked you to turn off the TV cameras–it got drunk and now it’s got a hangover,” Bush said Friday at a fund-raiser in Houston. “The question is how long will it sober up and not try to do all these fancy financial instruments.”

It is unclear why Bush felt discretion was required for this pronouncement. After all, the idea that Wall Street risk management got out of hand is conventional wisdom. In Saturday’s Wall Street Journal, James Grant asked why there isn’t more American outrage about what UBS called “the greatest failure of ratings and risk management ever.”

And comparing Wall Street’s behavior to drunkenness isn’t an insult, it is an understatement. What is more, it probably isn’t even the best metaphor.

Now, we aren’t taking issue with Bush’s way of speaking here; his chatty, breezy demeanor is well known by now. We’re just wondering whether drunkenness is really the way to describe the situation, even though we have used a version of it ourselves in the past.

But being drunk implies being under the influence, a foggy state where alcohol calls the shots and individual morality often seems to take a holiday. That isn’t what happened on Wall Street: the thousands of traders and executives that pumped up the credit boom made specific decisions to buy ever more collateralized debt obligations. They saw competitors making a mint and followed suit. If they were under the influence of anything–hold your jokes, please–it was greed(not that that’s a bad thing), or at least adrenaline.

Nor did Wall Street get “drunk” on credit all in one bender. It took years–from 2002 to 2007–to build up to the fever pitch of ever looser lending requirements and debt that carried nary a protective covenant for holders. Some people might instead use the metaphor of a frog in boiling water–the water on Wall Street wasn’t hot in 2002, but soon it simmered and then reached a boil without the frog realizing the danger it was in.

The conventional question when something goes wrong is whether the offender was evil, or just stupid. Reasonable minds can disagree about the best course of action, and some might maintain that such investments seemed like the best idea at the time. After all, nothing on Wall Street is permanent and you make your money when you can, where you can. The Wall Street Journal has reported in the past that Merrill Lynch’s Osman Semerci and Dow Kim, for instance, aggressively pursued CDO and mortgage business to boost profits even while then-executive Jeff Kronthal was opposing such moves because he felt the end of the mortgage boom was near. Is that stupid, or does is another metaphor more apt: that of musical chairs–someone had to be left without a chair when the music stopped.

And evil? Were those who fueled the credit crunch using borderline-dishonest methods or did they outright misrepresent the securities they were selling? The picture here might be the dastardly villain from the 1920s, twirling his mustache as he tied the maiden (or bundles of CDOs and other mortgage-backed securities) to the railroad tracks. The regulatory investigations pending on many related issues may provide the answer.

In the end, Deal Journal readers, we put it to you: What is the best metaphor to describe the behavior that fueled the credit boom? Was it drunk, evil, stupid or something else entirely?

Update: MarketBeat chieftain David Gaffen gets at the heart of the matter by asking: If Wall Street was drunk, who was the bartender doling out the drinks? Read his post to get the answer.

Photo courtesy of Flickr user Frenkieb.