The first global financial crisis (GFC) fallacy is that the crisis was caused by the government not bailing out Lehman Brothers. Not true. The second GFC fallacy is that the crisis was caused by “greed”. This error, while popular, is very easy to debunk.
The assumption underlying the “greed did it” argument is that greed in an industry (eg US banking) leads to trouble in that industry (eg US banking). At first this looks appealing. There was greed in the US banking industry and also significant problems.
The problem with this thesis is that greed isn’t just limited to the US banking sector… it is everywhere. There is greed in the Australian banking sector, and it is doing fine. There is greed in hedge funds, and they did better than banks. There is greed in the fast food industry, shoe manufacturers, tour operators, software developers and every other business… but none of these industries imploded in crisis.
Basically, greed is a constant for all business (and indeed, all human behaviour) through all of time. The GFC & recession are temporary variables sparked in one country. You cannot explain a variable with a constant. To find the cause of the US banking troubles, you need to look for variables that are specific to the US banking sector over the past 10 years. And that isn’t greed.