The real cause of the financial crisis was a combination of mistakes by the Federal Reserve, along with government housing policy, which was implemented by Freddie Mac and Fannie Mae. Neither would have ever existed in a free market.
In the early 2000s Alan Greenspan was nearing the end of his career at the Fed while the U.S. was experiencing a minor economic correction. Greenspan wanted to go out a hero, so he ‘printed’ money to create negative real interest rates where one could borrow at less than the inflation rate. This led to a huge increase in borrowing.
When the Fed is printing money we think we are wealthier than we are, which creates excessive consumption. The consumption largely migrated toward the residential real estate market thanks to affordable housing lending quotas imposed on Freddie and Fannie by Congress. When the government sponsored enterprises failed they owed $5 trillion and had $2 trillion in subprime mortgages on their books. With a 65% market share, they drove down the lending standards for the whole industry.
By the way, housing is consumption as opposed to investment. You consume a house, just like you consume an automobile. During the government-driven housing boom, housing experienced a capital surplus amid a capital deficit for commercial innovators.
Ironically, instead of being caused by greed, the philosophical cause of the financial crisis was altruism. Altruism is not benevolence. It is otherism. Everyone is more important than you. As interpreted by statists, altruism means the collective is everything and the individual does not matter.
Everyone has the right to a nice house. Provided by whom? Everyone has the right to free medical care. Provided by whom? My right to free medical care is my right to force a doctor to provide that care or to force someone else to pay for my doctor. All of this runs counter to the traditional American concept of rights. In the latter, each of us has the right to what we produce. We do not have a right to what someone else produces.
The U.S. must radically change direction. The foundation for that change is philosophical. The cure for our problems are the principles that made America great in the first place: Life, Liberty and the Pursuit of Happiness.
You have a moral right to your own life and the product of your labor, including the right to give away as much of what you produce to whomever you choose. The political concepts that follow from these philosophical ideas are individual rights, limited government, free markets—or, more plainly, capitalism.