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  • New book reveals power and greed behind the global financial crisis

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June 27, 2022


  • Story By
  • Kate Mayhew
  • Photo By
  • Paul Jones
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Business and Economy
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EconomicsBusinessFinance
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UOW in the News

New book reveals power and greed behind the global financial crisis

Banking specialist warns we’re destined for future financial crises if institutional practices don’t change


A new book from a University of Wollongong (UOW) banking and finance specialist explores the US investment banking industry and the institutional drivers behind the global financial crisis (GFC).

Countdown to the Global Financial Crisis: A Story of Power and Greed (Cambridge Scholars, 2022) by Dr Paul Mazzola traces the pattern of crises that have impacted the US investment banking industry to reveal the longstanding banking culture that was established at the birth of the United States and culminated in the GFC.

Dr Mazzola, a lecturer in the School of Business, said the book is a pertinent reminder that the behaviour of banks has not improved since the 2008 GFC.

“With banking culture, it seems the more things change, the more things stay the same,” Dr Mazzola said.

“While writing my book I found repeated flawed behavioural patterns prior to each crisis from the American War of Independence to the present day.”

The book finds that the culture of the industry, behaviour of individuals, and regulatory bodies all played a part in the GFC. Dr Mazzola, a former investment banker, explores how the US, the stalwart defender of capitalism, has endured a litany of characters who succumbed to the corrupting influence of power.

One of the high-profile characters Dr Mazzola critically analyses is ex-Chairman and CEO of Lehman Brothers, Richard Fuld.

Dr Mazzola reveals how Fuld’s strategy tended to push the risk boundaries even further than his predecessors in the areas of leverage, product innovation and asset positions, such as an ill-informed overexposure to the property market during the formation of the housing bubble.

“Fuld’s objective of attempting to generate ever-increasing profits was also self-serving as a large portion of Fuld’s compensation consisted of bonuses aligned with firm performance,” Dr Mazzola said.

“Fuld’s domineering decision-making style should act as a warning against future governance failures. He lit the wick of the GFC flame that was fuelled by decades of greed.”

Dr Mazzola said Australia’s banking culture isn’t much better, despite calls for reform.

“Unfortunately, I’m not optimistic that things will change dramatically. In Australia, we’re two years on from the Banking Royal Commission and there hasn’t been the progress you’d expect in the scandal-prone sector,” he said.

“Exploitation of customers, the misalignment of governance frameworks and practices, and the profit driven performance incentives which drive self-interest combine to maintain a culture underpinned by power and greed.”

“I hope my book offers the industry a cautionary tale because until the dysfunctional human behaviours that led to the GFC are modified, we are destined to suffer similar crises.”

Countdown to the Global Financial Crisis: A Story of Power and Greed will be formally launched by recently retired Financial Services Institute of Australasia (FINSIA) Chief Executive, Chris Whitehead, on Friday 1 July 2022 at the Sydney Business School.

Media Contacts for this article

UOW Media Office

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