7. the flawed thinking of The Wizard of Libertarians and Randians
Greenspan believed that honest CEOs will prevent any material corporate fraud. Further, there is no serious problem because markets force CEOs to act as if they were honest since a good reputation is essential to the CEO. Under laissez faire, "frauds" had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business (i.e., free markets correct).
Or in more simple terms, CEOs are virtuous, and a CEO who deviates from the ethical standard will be put out of business as markets correct. As a result, fraud need not be policed.
It turns out that Greenspan's blind spot was that unethical frauds would choose to collude and place their own avarice above the viability of their business.