There is little doubt in my mind that executive pay and incentives contributed to the crisis. At the same time though, I am affraid that the herd mentality of the markets played a huge role as well. Seemingly, when things are good they can only get better (bubbles by definition), and when things are bad they can only get worse (see Europe). The psyche of all the actors involved, be it from house (flipping) buyers all the way to the financial firms that packaged real estate loans and sold them to markets that semed not be getting enough of them all contributed to the downfall. It reminds me of my grand father, if it seems to good or too easy to be true, it probably is. The herd mentality of the market generates these massive booms and busts, everybody is feeding on them, some more, some less ,from households, to real estate agents,to mortgage brokers, to tax services, Bank and finacial firms all the way through to investors everybody wants to be on the gravy train. Even once there are clear signs that speculation is a significant proportion of the trades driving prices up, no one wants to be left behind. Everybody contributed to the financial crash, the problem is that while just about everybody had to take a hair cut as a consequence, most CEOs, and much of the top brass in the financial sector came away pretty much unscathed even when they benefitted from a massive bailouts. Why?