There's a lot of blame to go around for the financial crisis. Did poor business school curriculum play a part? Many of the executives at the heart of the crisis held MBAs and/or undergraduate degrees in business from renowned universities. Clearly, their education was insufficient to prevent the financial collapse that occurred. Could business schools have taught students better so to avoid the crisis?

In another part of this week's installment of the Big Think's ongoing "What Went Wrong" project, it interviewed Glenn Hubbard, Dean of Columbia Business School. He acknowledged that business schools probably could have done better. So I asked how they're changing their curriculum to better educate future business leaders. He responded:

Well even before the crisis, we had implemented a new curriculum that brought in a sense more of financial history and business history and of international trends, so we were doing that before. After the crisis, we really focused this a lot by giving students much more of a sense of perspectives across disciplines in their classes with an idea toward getting them to think in a bigger picture way. I think it's too easy to go to business school and become an expert in something, finance, accounting, operations, whatever interests you without thinking about the very broad platform for leadership. But I do think that was part of the financial crisis. I don't think it was most of it, but I think it was part of it.



First, I'm utterly unconvinced that history will do all that much good. The problems that caused the recent financial crisis weren't present historically. Banks didn't historically have lots of hidden leverage. Securitization hadn't historically grown to the point it did over the past decade. Credit default swaps were a relatively new concept; history wouldn't help there. Fannie and Freddie also didn't grow as gigantically until recently. Finally, subprime mortgages and the wacky products that resulted were relatively new concepts.

But I like the idea of broadening the curriculum that all business students are exposed to. Why should someone with a focus of, say, equity research care about derivatives or securitization? Because one day that student might be the CEO of a firm that also purchases mortgage-backed securities. An MBA should signify some more robust level of business knowledge rather than an expertise in just one aspect of business. Without a broad education, MBAs have become specialty degrees, but that's hardly useful when graduates become executives. I'd argue that business leaders' lack of a broad understanding of financial markets served as a major cause of the crisis.

I noted this problem quite a while back in regard to former Treasury Secretary Hank Paulson implying that he hadn't really understood much about securitization as the head of Goldman Sachs. With finance and business as interconnected as it is today, executives must have a broad understanding of finance. That isn't easy, but it is necessary.

Don't get me wrong: executives having a broader understanding of business and the financial markets wouldn't suddenly create an economy without recessions or bubbles. But it could make those recessions and bubbles less severe. For example, if more people had understood the role of the securitization and the government-sponsored mortgage companies, then more might have bet against the housing market sooner, resulting in a recession without a crisis. If the MBAs at AIG involved in their non-derivatives insurance business had a better understanding of credit default swaps, maybe they would have questioned what was going on in its financial products division.

But maybe not. All the education in the world might not have changed anything, but it couldn't have hurt. To be honest, I've always been highly skeptical of the usefulness of business school. Virtually everyone I spoke to who had gone advised me not to waste my time and money, unless I felt the need to make connections or wanted to change industries. Now, more than ever, I think the validity of an MBA should be in question. As described above, the first step is business schools requiring a broader curriculum of their students. If that means it takes more than two years to get the degree, then so be it. At least then, maybe it will be worth the paper it's printed on.

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.