[Realism]

Greenspan, 82, acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that “a flaw in the model ... that defines how the world works.”

Flaw in the model? Greed is a fact of life.

[PapaBear3625]

Greenspan, 82, acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions.

Here's Greenspan's crucial error: BANKS DO NOT MAKE OPERATING DECISIONS.

Individual executives make decisions, and the decisions they made were for their own personal self interest, NOT for the long term interest of the company. The mistake was in assuming that executives care about what happens to the institution after they have taken the money and left. The banks had executives that were willing to make decisions that would cost OTHERS billions, as long as THEY got their bonus packages.