Back in October, not long after Lehman Brothers collapsed and triggered a meltdown on Wall Street, the usually prim Financial Times mocked the alumni at Harvard Business School’s 100-year anniversary gala as they “sipped champagne and chatted fondly about old times.” (“We will leave the talk of fixing the blame to others,” Harvard’s dean assured the gathering.) BusinessWeek piled on, hosting an online debate: “Business schools are largely responsible for the U.S. financial crisis. Pro or con?” These and other critics wondered: What had they been teaching our nation’s best and brightest in these MBA programs, anyway?

“In a way, finance professors caused this problem—I’m not bragging about this,” says Charles Trzcinka, who chairs the finance department at Indiana University–Bloomington’s Kelley School of Business. He points out that many of the financial tools that played a starring role in the current crisis, from the countless ways to divvy up and sell mortgage-backed securities to the explosion of credit default swaps, were taught in business schools without, often, a full appreciation for how they could go sour—if, say, housing prices cratered or large counterparties went bust.

Business schools aren’t, of course, primarily responsible for the implosion of global finance. But, across the country, business-school faculties are grappling with the possibility that they’ve been instilling generations of students with a naive faith in free markets, teaching them to focus solely on short-term profits, and justifying some of the more outrageous executive-compensation schemes that have become Exhibit A in the case against corporate America.

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In recent decades, the swelling of the U.S. financial sector has meant boom times for B-schools. By 2007 some elite business schools were shipping out roughly 40 percent of their graduates to large investment banks, hedge funds, and private equity firms, while students were elbowing their way into electives like “Corporate Financial Engineering.”

Trouble was, students often weren’t learning as much as they should have. “There were so many people who just wanted to learn enough to get a job in this field,” says Trzcinka. Out in the corporate world, many managers failed to grasp the subtleties and limitations of the mind-boggling mathematical models that were helping them earn outsized returns. “Look at Lehman Brothers in 2005: If you were one of the chief risk officers, what could you have done to convince senior management that you were heading for disaster?” asks Andrew Lo, who teaches financial engineering at MIT. “I’d argue virtually nothing. Unless senior management understood these models to the extent that [their quantitative analysts] did, there’s no way you could convince them to pull back—business was too profitable.”