So the esteemed professor thinks  this is a banking crisis caused by inaccurate pricing of risk. 

While we  agree there is a crisis, it is not the banking system that was the entire problem, the insurance industry, namely AIG played a major role.  It goes way back to the failed theory of portfolio insurance.  AIG was selling insurance that at its core would not work, could not work.  Banks did not miss price risk, they bought insurance against it.  In fact the insurance was so mis-priced banks, pensions, hedge funds could take excessive risks in investments that they knew were not prudent, but buy insurance against outlier risk and  all was well. 

Well the only way to invest the new found premium income by the insurance  companies was to invest it in the same markets they were insuring would not fall, and if they did, the insurance company would make the insuree whole.  Well if the insurees market collapses and the insurer is invested in the same market, how in the hell  is it going to make the insuree whole if the insurer just  lost  as much as the insuree?

Did the insurers know the rediculous risks they were insuring?  Obviously not. 

Regulators bought into the theory of taking excessive risk, but buying insurance against outliers but never questioned the quality of the insurance or hedges. 

No one thing pushed this economy over the brink, it was a "Tipping Point" of accumulated  sins of the financial market participants.