Federal Reserve Chairman Ben Bernanke ,right and former chairman Alan Greenspan make an appearance together in 2007.
The Financial Crisis Inquiry Commission, headed by former California State Treasurer Phil Angelides, has determined that the crisis that kicked off with subprime mortgage defaults in 2008 was "avoidable," but wasn't able to pin the blame on any one party.
In a 662 pages worth of conclusions and dissents, panel members took to task former Fed chief Alan Greenspan, his predecessor Ben Bernanke, an array of other regulators, the Bush and Clinton administrations, Congress, banks, Wall Street trading firms, Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB) and American International Group (AIG_).
"Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs," Angelides said in a statement. "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."
The bipartisan commission was set up in May of 2009 to produce a comprehensive investigation of what went wrong before and during the global financial crisis that began to unravel the previous year. The commission has held 19 hearings, as well as interviews with 700 witnesses, to come up with its final report.
In particular, the report blames Greenspan for his laissez-faire monetary policy as the housing bubble inflated, and Bernanke for not having foreseen the calamities ahead.
It also faults the Bush administration for its haphazard approach to tackling the crisis, letting Lehman Brothers fail while Bear Stearns and Merrill Lynch were acquired by JPMorgan Chase (JPM_) and Bank of America (BAC_), respectively, and while those two banks, along with Citigroup (C_), Fannie, Freddie, AIG and hundreds of other companies received bailout funds from the federal government.
It also criticized the Clinton administration for fostering deregulation and U.S. Treasury Secretary Timothy Geithner - who oversaw financial firms as head of the Fed Bank of New York - for not keeping a close enough eye on Wall Street.
By contrast, one dissent by American Enterprise Institute fellow Peter Wallison pegs all the blame on U.S. housing policy. Another dissent by three members blamed 10 different elements, calling the panel's conclusion "too broad," but adding that it couldn't hone in on just one party to blame. While the FCIC was touted as a bipartisan committee, the dissents were essentially split along party lines.
"Not everything that went wrong during the financial crisis caused the crisis, and while some causes were essential, others had only a minor impact," said the three dissenters. "...The majority's almost 550-page report is more an account of bad events than a focused explanation of what happened and why. When everything is important, nothing is."
>>>Read The Full Report of the Financial Crisis Inquiry Commission
>>>Read The Dissent By Keith Hennessey, Bill Thomas and Douglas Holtz-Eakin
>>>Read The Dissent By Peter J. Wallison
-- Written by Lauren Tara LaCapra in New York.
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