The Global Financial Crisis of 2008: What Went Wrong?
36 Pages Posted: 10 Mar 2009 Last revised: 6 Aug 2010
Date Written: March 9, 2009
The current financial crisis that threatens the entire world has created an ideal opportunity for educators. A number of important lessons can be learned from this financial meltdown. Some are technical and deal with the value of mathematical models and measuring risk. The most important lesson, however, is that unethical behavior has many consequences. This debacle could not have occurred if the parties involved had been socially responsible and not motivated by greed. Conflicts of interest and the way CEOs are compensated are at the heart of this financial catastrophe that has wiped out trillions in assets and millions of jobs. The authors present a set of lessons as teaching opportunities for today's students and tomorrow's decision makers.
[A modified version of this paper appeared as H.H. Friedman, L.W. Friedman, "Lessons from the Global Financial Meltdown of 2008," Journal of Financial Transformation, vol 28, 2010, pp.45-54.]
Keywords: business education, business ethics, financial meltdown, self-interest, toxic mortgages, credit default swaps, regulation, methods of compensation.
JEL Classification: A22, A23, G18, G21, G28, M14
Suggested Citation: Suggested Citation