Just as everyone is trying to digest the SOTU and the sideshows that were the Republican responses, the Financial Crisis Inquiry Commission is releasing its findings and they find that this meltdown was completely avoidable. Causes cited look won’t contain many surprises to folks not in denial about the clear policy choices that were contributing factors:
- Alan Greenspan was negligent
- Ben Bernanke couldn’t keep up
- The Clinton-signed Glass-Steagal handed over the keys to the candy shop
- And the Clinton financial team sheltering of derivatives from regulation made the excesses easy to hide
- Credit-rating agencies failed to do their job
- Excessive leverage at the biggest banks
- Paulson was wrong about containing subprime crisis
- Geither never clamped down on Citigroup
- The SEC and the Office of the Comptroller of the Treasury failed in their functions
There’s more at the NYT link and there ought to be a lively debate about this in the days ahead — if we were having a smart debate we’d be wondering if the Dodd-Frank regs go far enough to try to head off another meltdown in the future (I think NO).
Last bit:
The report does knock down — at least partly — several early theories for the financial crisis. It says the low interest rates brought about by the Fed after the 2001 recession; Fannie Mae and Freddie Mac, the mortgage finance giants; and the “aggressive homeownership goals” set by the government as part of a “philosophy of opportunity” were not major culprits.
So let’s keep rolling our eyes at the claim that somehow poor people caused the meltdown. And if you hear this from someone who claims to be a financial expert — run fast in the other direction or be prepaid to lose your shirt.