Financial crisis was avoidable: FCIC

Financial crisis was avoidable: FCIC
The full report

Common Sense thinks this is well worth reading.  While there may be disagreement, overall the report is thoughtful and well researched.  Herewith some key findings:

• Big finance, government regulators, and congress share blame.  You and I not so much!
• Financial regulation and supervision failed.  Self regulation pushed by big finance didn't and doesn't work.
• Big finance corporate governance and risk management failed miserably.  Big finance acted recklessly.
• Excessive borrowing, risky investments, and lack of transparency at big finance was a particularly noteworthy cause.
• 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 in big finance.
• Poor mortgage-lending standards and the mortgage securitization are a particularly noteworthy cause. We conclude over-the-counter derivatives contributed significantly to this crisis. The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter (OTC) derivatives was a key turning point in the march toward the financial crisis.
• Credit rating agencies were failed and are key factors.

Big finance, lack of regulation, and unethical behavior are responsible for the largest economic recession since the great depression.  Common Sense wonders what then should we do?  Does it make sense to buy into the anti regulation pro-business theories currently in vogue in the House?  Common Sense thinks not.




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