I do think that the monoculture they had developed was unhealthy--it did leave them completely unable to even think about the world post-2007 at all.
You can put me down as suspecting that Mark Thoma is right, but I have no insight:
Stephen Williamson: Problems in the Great White North:
You think I'm going to discuss the mess the Mayor of Toronto [Rob Ford] is making in his city, and the embarrassment faced by those of us who have an attachment to the place? Actually, the problem I'm going to focus on is located in Minneapolis--otherwise known as Toronto On a Bad Day. The Minneapolis fracas has some parallels to the Toronto fracas.... Kocherlakota has declared war on his own research department, and seems intent on destroying the place.... If the greater good is supposed to be better policy, then it seems that many sharp macroeconomists beg to differ. So, what's to be done? Like the Mayor of Toronto, Narayana Kocherlakota seems locked in his own bubble. The Mayor of Toronto doesn't seem good for much of anything. He should do the world a favor, resign, and go live as far away from other human beings as possible. Narayana, though, is indeed good for something.... There are plenty of first rate academic research departments that would be happy to give him a good home. Central banking, however, is not his calling, and he should quit--and do everyone, including himself, a favor.