Ground beef is combined together from different suppliers, much like a collateralized debt obligation. This makes it very hard to identify the source of an outbreak.
Ground beef is usually not simply a chunk of meat run through a grinder. Instead, records and interviews show, a single portion of hamburger meat is often an amalgam of various grades of meat from different parts of cows and even from different slaughterhouses. These cuts of meat are particularly vulnerable to E. coli contamination, food experts and officials say. Despite this, there is no federal requirement for grinders to test their ingredients for the pathogen.
Self regulation does not work here very well:
Unwritten agreements between some companies appear to stand in the way of ingredient testing. Many big slaughterhouses will sell only to grinders who agree not to test their shipments for E. coli, according to officials at two large grinding companies. Slaughterhouses fear that one grinder’s discovery of E. coli will set off a recall of ingredients they sold to others.
Given how often I eat hamburgers this is a most important story. It seems incentives for self-regulation here are much worse than in the financial industry. Notice that with securitization the problem is that it is very difficult to disentangle the loans that make up the security. But in hamburgers it is impossible to distinguish which producers supplied the tainted meat. This is due to the lack of testing at the source, a result of an inadequate regulatory structure and the failure of self-regulation in this industry.