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For an example of how corrupt management and poor internal controls can undo a financial institution, look to West Virginia's now-defunct First National Bank of Keystone. Nearly a decade before the subprime mortgage-backed securities crisis of 2007-2008, U.S. regulators uncovered a $500 million fraud at the bank made possible by a toxic mix of poor due diligence, a cowed staff and inadequate oversight. Keystone, which bundled and sold subprime loans while covering up its own financial losses, was previously seen as one of the nation's top-earning banks of the 1990s. The scheme was enabled by the fact that "time is...