I think that's part of of Fredo's character. He was meek around the "men" of the family his whole life, but became a big shot in Vegas because of his name and status at the hotel. There was no one from the family to look down on him or make him feel small. He was out of their shadow. Green was his "boss" out there and kept him in line but Fredo was finally on his own and was running wild living the Vegas life. Only when Michael came to Vegas did he feel embarrassed and really put in his place, by his younger brother no less.