expecting a crisis would mean losing ones job, while the worst the crisis could do was the same job loss, but a few well-paid years later.

But if group-think didn't really hurt the long term profits of those involved, there is no reason to assume it will go away.

I agree that the short term rationality is obvious for those inside the system: following group-think was indeed profitable, and not doing so was detrimental to your income and career.

The question is what the long term prospects are. For the traders and the big bonus earners, the gains over a few years may justify to accept the prospect of not being able to make a cent long into the future, but this is most likely not true for the institutions themselves, nor for their management. which suggests (as the article points out in its conclusion, which I did not copy here) that management was effectively prisoner of the short term motivations of its staff - and derelict in their duty to their company and its shareholders.

Oddly enough, this may be a case where more assertive shareholders would be needed - shareholders able to look beyond a few quarters of bumper profits and see the potential ruin of the value of their shares.

If you look at what shares in Citibank et al have done over the past few years, it's really not great...

In the long run, we're all dead. John Maynard Keynes