Details here and here.

Note how all the security theater implemented after 9/11 failed to stop this attack.
  • Security processes were followed correctly, but did not detect the explosives in this man's underpants.
  • The man's name was checked against the "no fly" list; he wasn't on it.
  • In fact, the man was traveling on a valid US visa.
The real reason this attack failed?
  • The explosive device apparently malfunctioned. Instead of simply blowing up the plane, it merely caused a local fire.
  • When passengers smelled the fumes and saw the flames, they acted aggressively, perhaps preventing a worse turnout.
The response of the Obama administration: more security theater.
US President Barack Obama, on holiday in Hawaii, has ordered increased security for air travel.

The US Department of Homeland Security said "additional screening measures" had been put into effect since the incident.

"These measures are designed to be unpredictable, so passengers should not expect to see the same thing everywhere," Homeland Secretary Janet Napolitano said.
Prepare to be harrassed and inconvenienced again for a false impression of safety.

Then again - perhaps the existing security measures did help prevent a disaster, in that they forced the perpetrators to try a poorly tested design (PETN in underpants) rather than a more conventional device (which might have worked, and blown up the airliner). I just hope that the new "surprise" security measures won't again raise the frustration in air travel to a whole another level.

See also this hilarious South Park episode where Mr. Garrison invents an alternative to air travel.