Today at 10 AM, the FCIC will release a 550-page report on what caused the financial crisis.
The Dissenting Statement, written by people who disagreed with what the report concluded, has already been released.
It’s weird because in the first three pages of the FCIC’s Dissenting Statement, the committee explains how the financial crisis was not caused by anything in particular.
The majority’s almost 550-page report is more an account of bad events than a focused explanation of what happened and why. When everything is important, nothing is.
As an example, non-credit derivatives did not in any meaningful way cause or contribute to the financial crisis. Neither the Community Reinvestment Act nor removal of the Glass-Steagall firewall was a significant cause. The crisis can be explained without resorting to these factors. We also reject as too simplistic the hypothesis that too little regulation caused the crisis, as well as its opposite, that too much regulation caused the crisis.
But then the committee lays out 10 specific “essential” causes of the financial crisis —
- The credit bubble
- The housing bubble
- Nontraditional mortgages
- Credit ratings and securitization
- Financial institutions concentrated correlated risk.
- Leverage and liquidity risk
- Risk of contagion
- Common shock
- Financial shock and panic
- Financial crisis causes economic crisis
Interesting how everyone’s “shock” and “panic” are only two things that caused the crisis, and the finance industry is responsible for #5 and #6, the credit ratings agencies/securitization companies for #4, and it’s hard to put your finger on who’s responsible for the rest.
The findings come from 19 days of hearings and interviews with more than 700 witnesses, and other emails and documents — and apparently Goldman’s name comes up “a lot.”
Click here to download the Dissenting Statement. The full report comes out at 10 AM.
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