Final verdict on the American financial crisis is muddled, just like the crisis itself
The bi-partisan Financial Crisis Inquiry Commission (FCIC) appointed by Congress issued its final report yesterday on what it believes lead to
the economic meltdown. After months of examining evidence and hearing testimony from big time players in the financial arena
including Fed Chairman Ben Bernanke, U.S. Federal Deposit Insurance Corporation (FDIC) chairman Sheila Bair, Warren E. Buffett, and executives from Citibank to Goldman Sachs, the commission dispelled the notion held by many on Wall Street and in Washington that the economic crisis that launched this country and parts of the world into a major economic recession was unforeseen and therefore not preventable. The commission noted “systemic breaches in accountability and ethics at all levels” including the Federal Reserves inability to effectively manage the wave of toxic mortgages. The group found that legislators and regulators didn’t fully understand the economic system they were charged with overseeing and that ignorance coupled with inaction allowed too many financial firms to act “recklessly”. The commission’s report notes that lending standards were out of control—institutions lent to too many risky borrowers, the prevalence and lack of regulation of over-the-counter derivatives and the failure of credit rating agencies to accurately reflect the value of the products they were reviewing contributed significantly to the crisis. It’s important to note however that the conclusions of the 10-person bipartisan commission weren’t unanimous. Three conservative members of the commission released a dissenting statement lambasting the majority for presenting narratives that had a “popular appeal” but didn’t necessarily factor in the complicated nature of the global economic market.
dissenting statement lambasting the majority for presenting narratives that had a “popular appeal” but didn’t necessarily factor in the complicated nature of the global economic market.