by Harsha Sekar
From the perspective of a housing commentator, last week was one of the more eventful in quite a while. Buried underneath the maelstrom of news covering the President’s State of the Union and the protests in Egypt, last Thursday the Financial Crisis Inquiry Commission (FCIC), a bipartisan panel created last year to investigate the origins of the 2008 financial collapse, released their long anticipated findings—the Commission concluded that, all things considered, the financial system’s implosion was no doubt “avoidable.”
In fact, the FCIC’s webpage declares:
The Commission concluded that this crisis was avoidable—the result of human actions, inactions, and misjudgments. Warnings were ignored. ‘The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.
What’s notable is the extent to which the report reiterates the factors identified by the vast majority of experts. Which prompts one to wonder how influential the pundits and news media have been on the Commission itself. As far as the main causes of the crisis, the report’s bullet points include; “widespread failures in financial regulation,” “dramatic breakdowns in corporate governance,” “excessive borrowing and risk [taken] by households and Wall Street,” “key policy makers ill prepared for the crisis” who were “lacking a full understanding of the financial system they oversaw,” and “systemic breaches in accountability at all levels.”
Needless to say, this strikes most other commentators as an exhaustive criticism of the entire American political and economic systems. Consequently, the panel has provoked much commentary. According to the Paper of Record, the report—which was intended to be strictly bipartisan—possesses “embarrassing implications for both parties.”
Of course, the report Commission contained dissenters, all of whom just happen to members of the anti-regulation Republican Party. Perhaps the most newsworthy of these is Peter Wallison, an employee of the right-wing think tank, the American Enterprise Institute. According to the Times’ Business columnist Joe Nocera, Wallison’s dissent signifies a “lonely, looney cri de coeur that placed the blame for the financial crisis entirely on Fannie Mae, Freddie Mac, and federal home ownership policies.” Nocera describes this view as a “position so contrary as even his fellow Republican commissioners did not agree with him.”
While the panel’s 545-page document clearly aims to level a sweeping condemnation of the system at large, it unfortunately lacks the sort of substance that is necessary to meaningfully interpret the panel’s findings. More specifically, the FCIC’s nebulosity makes it difficult for policy makers and citizens alike to discern exactly what is to be done in order to patch up the damage. And it provides no suggestions on how to ensure that such a calamity won’t happen again. While the study may have been necessary and the criticism of well-resourced institutions is reassuring, more substance would be have nice, too.