Via Krugman,  Andrew Haldane, the executive director for financial stability at the Bank of England, says

In fact, high pre-crisis returns to banking had a much more mundane explanation. They reflected simply increased risk-taking across the sector. This was not an outward shift in the portfolio possibility set of finance. Instead, it was a traverse up the high-wire of risk and return. This hire-wire act involved, on the asset side, rapid credit expansion, often through the development of poorly understood financial instruments. On the liability side, this ballooning balance sheet was financed using risky leverage, often at short maturities.

In what sense is increased risk-taking by banks a value-added service for the economy at large? In short, it is not.

Many people say that the problem of the 2000s was an easing of credit. How much of that was the increase of risk and leverage, that is, credit created by the private market? It also created a boom and housing bubble.

Better regulation could have forestalled this "easing." How about Greenspan raising rates? But he had lowered rates to prevent a double-dip.

Did the "easing" help create the savings or banking glut?