I’ve always thought that the 2008 financial crisis was basically tight money plus moral hazard, with the latter factor playing the biggest role. I’m no expert on banking, but I’d guess that these three factors increased moral hazard (in order of importance):
1. FDIC (deposit insurance)
2. The GSEs (Fannie and Freddie)
3. Too Big to Fail
I’ve already spent a lot of time discussing the role of tight money, but I also believe that deposit insurance is a massively underrated problem.