The cause was a reckless use of leverage for short term gains with a complete disregard for the longer term consequences. Now Wall Street is acting as if Dick Fuld and Lehman Brothers was the only problem. One hears constant references to “worse market since Lehman collapsed” “not since the Lehman collapse” etc. Beware this line of thought, it will lead us right back down the rabbit hole. September of 2008 was a disaster but it was not caused by one firm but rather the entire industry who are now trying to pretend they had no hand in the debacle and it was the responsibility of one firm.
This is the banking equivalent of the Wizard’s “Please ignore the man behind the curtain”