Financial Crisis Was Avoidable, Inquiry Finds - finds fault with two Fed chairmen

[groovedaddy]

WASHINGTON — The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions, which were read by The New York Times. “If we accept this notion, it will happen again.”

While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with embarrassing implications for both parties. But the panel was itself divided along partisan lines, which could blunt the impact of its findings.

http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html?_r=1&nl=todaysheadlines&emc=tha2

[The Backlash Cometh]

1. Faulting two administrations.

Would one of those Administrations be the Clinton Administration? And would the time period happen to coincide with his triangulation period which President Obama is now trying to imitate?

[intheflow]

2. That should be "faulting at least two administrations."

This started with Reagan's deregulating madness which has been SOP for both Republican and Democratic administrations every since. x(

[The Backlash Cometh]

3. How many times do we keep having to make the same mistakes?

How many times?

They don't see it because we live in a stratified America. Deregulation works for a small group at the top. When it fails, however, we all have to pay to make up their losses.

This is so obscenely unfair.

[bvar22]

4. They are not "mistakes".

They are carefully planned and executed.
The Great Wall Street Banker Heist was choreographed to fall between the administration change over, offering Plausible Deniability to the co-conspirators.

[The Backlash Cometh]

5. If we know the cause and effect, it will be easier to catch them

The key is to keep the avenues of information open to the public. The newspapers have to come through for us or we have to come up with a viable substitution for them.

[JohnWxy]

7. I guess because it was during the last days of the Clinton Adm that Phil Gramm slipped in the CFMA

as a rider to the Omnibus Funding Bill 2000. This bill Gramm new could not be vetoed even if anybody found out the Commodities Futures Modernization Act was in the 11,000 page bill (which virtually nobody did).(see; http://motherjones.com/politics/2008/05/foreclosure-phil">Who Wrecked the Economy - Foreclosure Phil)

The CFMA legalized trading in Derivatives, such a Credit Default Swaps, without ANY regulation. It also contained the infamous ENRON Loophole which allowed ENRON to trade energy futures electronically. This enabled ENRON to scam electricity consumers for Billions of dollars in overcharges but also lead to ENRONs bankruptcy.

The trading in Credit Default Swaps is what lit a fire under the sub-prime lending market as banks told prospective investors they could invest in higher paying (and riskier) Bundled Mortgages bacause by buying a Credit Default Swap the investor would be insured against loss due to default of the investement. Thus many instititutional investors started investing in a very big way in risky Bundled Mortgages they would not ordinarily have invested in - because they bought Credit Default Swaps which they thought protected them form loss of their investment. This created a huge demand for High rate mortgages (read sub-Prime loans) leading mortgage originators to meet that demand with liar loans etc.

[The Backlash Cometh]

8. Isn't it something how we can track these bad ideas to the people

who pushed them forward and they still get to keep their reputations?

[florida08]

6. LOL

unavoidable my aunt fanny. How many times do they expect us to fall for this? It was a heist. It was a heist in the great depression and the S&L. The crisis is that we keep letting them do it. It's why they go nuts when social programs are mentioned. It's a big club and we ain't in it. Profits go one way and it's not down. Our so called democracy has been copped a long time ago. Smedley Butler and John Perkins are just two insiders who have tried to warn us.

[Taitertots]

9. Why did you choose such a misleading title?

"finds fault with two Fed chairmen"
Did you even read the article?


The only concrete complaint they have against the FED is that Alan Greenspan wanted deregulation, but it was the legislature that actually did the deregulation. The only complaint they have with Bernanke is that he didn't foresee the crisis. Every single issue was related to Republican policies.

[groovedaddy]

10. That was pulled from the article itself. Is the NY Times trying to mislead us? n.t