One of the ancient trails that got us into this mess: greed.
Sometime a while ago, I listened to Alan Greenspan’s account of his years at the Fed. Three things struck me about it. First, he was a personal friend and long time follower of Ayn Rand. Second, he was a libertarian. Third, perhaps because of one and two, he trusted in what he called peer review instead of regulation. That is, he believed financiers entering into contracts would do their due diligence, vet the loan applicant and act in their own and their shareholders self-interest. Talk about idealism and objectivism. When I heard that back then, I thought, OMG, this guy is naive. Yep, he was and in the passage below from a NYT article, he admits it.
“…in a tense exchange with Representative Henry A. Waxman, the California Democrat who is chairman of the (House Committee of Government Oversight and Reform) committee, Mr. Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.”