Late last month, the Financial Crisis Inquiry Commission released its long-awaited Financial Crisis Inquiry Report, which is available in PDF here. The Commission was created to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.”
The Commission was established as part of the Fraud Enforcement and Recovery Act passed by Congress and signed by President Obama in May 2009. This independent, ten-member panel was composed of private citizens with expertise in areas like housing, economics, finance, market regulation, banking, and consumer protection. The Commission’s instructions set out nearly two dozen topics for inquiry and called for the examination of the collapse of major financial institutions that failed or would have failed if not for assistance from the government.
The Commission concluded -- perhaps not surprisingly -- that the crisis was avoidable. Generally speaking, it found “widespread failures in financial regulation; dramatic breakdowns in corporate governance; excessive borrowing and risk-taking by households and Wall Street; policy makers who were ill prepared for the crisis; and systemic breaches in accountability and ethics at all levels.”
While the report has been criticized by analysts as being “a day late and a dollar short,” its conclusions are commendably thorough and non-partisan: “A crisis of this magnitude cannot be the work of a few bad actors,” the report states, warning that 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.”
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