FCIC report on financial crisis sparks routine partisan bickering

Thursday, January 27th, 2011 By

culprit according to FCIC

The Federal Reserve was one of the government institutions singled out by the FCIC as being responsible for the financial crisis. Image: CC skpy/Flickr

When the Financial Crisis Inquiry Commission report was issued Wednesday, partisan bickering was the big story. The FCIC report concluded that the financial crisis was ultimately the federal government’s fault, and it could have been avoided. The FCIC report was endorsed by six Democratic members of the commission, while the four Republicans disagreed with its conclusions and published their own.

FCIC report cites failure of government oversight

The FCIC was established in 2009 to determine the causes of the 2008 financial crisis and hold those responsible accountable. The commission’s report said the financial catastrophe that led to the Great Recession was the climax of three decades of financial deregulation. The commission implicates a long list of players, especially the Federal Reserve and Treasury Department. These institutions are charged with failing to reign in the financial malfeasance that pushed the nation to the brink of a depression. The FCIC report cites a litany of familiar terms such as toxic subprime mortgages, mortgage-backed securities, collateralized debt obligations and excessive, unsustainable leverage.

Partisan sideshows defeat purpose of FCIC report

While the FCIC report is the commission’s majority opinion, three Republican members released a minority report saying the FCIC’s conclusions are simply a list of what went wrong, not an examination of the root causes. The minority report focuses not on financial regulatory failures, but on market forces, which created a credit bubble that burst. Another report by the fourth Republican blames the government for promoting home ownership as the American dream. Republicans on the commission also accused Democratic members of keeping them in the dark about key decisions and ignoring their recommendations. Rep Darrell Issa, R-Calif., the new chairman of the House Oversight and Government Reform Committee, has launched an investigation of the FCIC, citing overspending, partisanship and conflicts of interest.

Business as usual on Wall Street

Despite the political theater in Washington inspired by the FCIC report, Wall Street went about its business as usual. Financial analysts don’t expect the markets to react to either the commission’s findings or the controversy. Wall Street banks, which got away scot-free when they were bailed out by hundreds of billions of dollars from the Federal Reserve, are once again swimming in money. This week the stock market has been flirting with 12,000, the level it had reached before the U.S. economy nearly collapsed.

Sources

Reuters

San Francisco Chronicle

MarketWatch

CNNMoney.com

Previous Article

« Iowa Catholic Conference pursues payday lending limits

The Iowa Catholic Conference should say what it means. A 36 percent APR payday loan cap would shut down the industry, not make it better. E. 38th St and Mass Ave.: Former Roselyn Bakery at the corner of E. 38th St. and Massachusetts Ave. in Indianapolis.
Next Article

Wyoming legislature may put cameras in classrooms for evaluations »

The Wyoming legislature is considering a plan to make firing and promoting teachers easier, and it includes putting cameras in classrooms. Security camera

Leave a Reply

Other recent posts by bryanh

New cars are cheaper than used cars in an upside-down economy

A new car loan could be cheaper than buying used thanks to 0 percent financing and a lower inventory of used vehicles available for sale ...
zero percent financing

Why the Alternative Minimum Tax should be changed by Congress

The AMT was created four decades ago to close loopholes for wealthy taxpayers, but today it places an extra tax burden on the middle class.
middle class amt

NPSL cards: The credit myth that puts you at risk

There are NPSL credit risks to consider. Find out what No Preset Spending Limit (NPSL) cards are and how they can affect your credit score..
Credit cards