The congressionally appointed Financial Crisis Inquiry Commission released a 535-page report on Thursday blaming the meltdown in part on compliance breakdowns and deficiencies.
The Commission concluded that this crisis was avoidable—the result of human actions, inactions, and misjudgments. Warnings were ignored. The the crisis was caused by:
- Widespread failures in financial regulation, including the Federal Reserve's failure to stem the tide of toxic mortgages;
- Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk;
- An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis;
- Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw;
- And systemic breaches in accountability and ethics at all levels.
"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. 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" said Phil Angelides, Chairman of the Commission.
The report was signed by FCIC chairman and former California State Treasurer Phil Angelides, former Florida Governor and Senator Bob Graham, former Commodity Futures Trading Commission Chairman Brooksley Born, Byron Georgiou, Heather Murren and John Thompson. Three Republican appointees – vice chairman and former California Congressman Bill Thomas and former advisers to President George W Bush Keith Hennessey and Douglas Holtz-Eakin – released a 29-page dissent. A fourth GOP dissenter, Peter Wallison, a former Treasury Department general counsel and counsel to President Ronald Reagan, released a separate, 98-page opinion. Please click here for the complete report, including both dissents.