As I mentioned yesterday in the tangential discussion of Marc Faber’s recent bearish views, the FCIC finally released its full report on the financial crisis. The report is below or available at the FCIC website. In the coming days the site will be updated with much more information including interviews, reports, discussions, etc. that the inquiry received from various sources.
As you would expect, after 18 months of research, the commission’s inquiry report is rather lengthy. So it is probably best skipped for reading over the weekend. I’m sure that the report will be dissected repeatedly in the media for the coming few weeks. If you’d like to just skim it, the most important parts are the conclusions that are drawn:
- The financial crisis was avoidable
- The widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets
- Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis
- A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis
- The government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets
- There was a systemic breakdown in accountability and ethics
- collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the lame of contagion and crisis
- over-the-counter derivatives contributed significantly to this crisis
- the failures of credit rating agencies were essential cogs in the wheel of financial destruction
Of the 10 members of there were 4 dissenting: Peter J. Wallison, Bill Thomas, Douglas Holtz-Eakin, and Keith Hennessey. Not surprisingly, all have a right wing ideological bias and are Republicans. I don’t think anyone is surprised to see, for example, that Peter J. Wallison who’s view is that the best method of regulation is deregulation dissent to the conclusions drawn by the inquiry. Wallison was previously co-director of the right-wing think thank, AEI’s Financial Deregulation Project (now called Reg-Markets).
Full report after the jump: