We had a 21st century financial system with 19th century safeguards.
For the last three years, Tea Party activists and Conservatives have blamed the financial crisis on social engineering and GSEs. Granted, the Financial Crisis Inquiry Commission's conclusions acknowledge that Fannie Mae and Freddie Mac played a lesser role in the financial crisis, but stated unequivocally that the GSEs did not contribute to the significant financial losses that were central to the financial crisis.
I find it deeply disturbing that an evaluation of the Fed's rules revealed that in 2006, just 1% of the residential lending market was covered by regulations designed to protect consumers from predatory lending practices. Was the decision not to regulate predicated on a reluctance to regulate? Was there a belief that regulation was not the right tool to constrain abusive lending? Because, you see, without the origination of a high risk loan, you couldn't have the securitization of a high risk loan.
So, "How did it come to pass that in 2008 our nation was forced to choose between two stark and painful alternatives — either risk the collapse of our financial system and economy, or commit trillions ($12.8 trillion) of taxpayer dollars to rescue major corporations and our financial markets, as millions of Americans still lost their jobs, their savings, and their homes?
The Financial Crisis Inquiry Commission concluded that this crisis was avoidable. 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."
I find it deeply disturbing that an evaluation of the Fed's rules revealed that in 2006, just 1% of the residential lending market was covered by regulations designed to protect consumers from predatory lending practices. Was the decision not to regulate predicated on a reluctance to regulate? Was there a belief that regulation was not the right tool to constrain abusive lending? Because, you see, without the origination of a high risk loan, you couldn't have the securitization of a high risk loan.
So, "How did it come to pass that in 2008 our nation was forced to choose between two stark and painful alternatives — either risk the collapse of our financial system and economy, or commit trillions ($12.8 trillion) of taxpayer dollars to rescue major corporations and our financial markets, as millions of Americans still lost their jobs, their savings, and their homes?
The Financial Crisis Inquiry Commission concluded that this crisis was avoidable. 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."
In this document, the Commission reports what it found so readers can reach their own conclusions, even as the comprehensive historical record of this crisis continues to be written.
Real wonks will want to check out the wealth of additional research available on the FCIC website. Just click the additional research and findings link below.
Link to PDF of the full Report
Conclusions of the Inquiry Commission
Additional Research and Findings
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