Greed is considered as one of the major factors of financial crises. Bankers were receiving higher bonuses on the risky investments and they complied with this policy and sold risky investments to the investors. They were not even punished for the losses and that is the reason why at that they promoted larger risk.
The biggest blunder was initiated by the rating agencies and they actually gave top rankings to the investments that were not earned in the initial phases.
Lack of regulation:
The lack of regulations by the decision makers actually created the entire mess and new financial instruments were actually created by the investments banks. These instruments that were actually created by these banks were not falling in the regulation of traditional banking laws and this aspect disrupted the entire scenario (M and C 2009). Governments did not warned the organizations at that time because everything was running very smoothly at that time however the risk was unidentified at that time and in the similar manner other warnings went unheeded.
The bubble bursts:
The housing marketing actually collapsed because of all this and crises were started just because of so-called mortgage backed securities. It became too late for the investors to change the course and the flow that was actually flowing in the market. This directly affected the banks and ultimately Lehman brothers were the first one to face the consequences (M and C 2009). The financial industry was badly affected by this and it resulted in loss of confidence in the market and the entire market stumbled because of this.
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