Tag Archives: Bob Graham

Financial Crisis Enquiry Commission

The Commission charged with investigating the financial crisis of ’07-’08 has finished its work. Their report is up at http://www.fcic.gov/ and the book is now available for $29; it’s about 700 pages. (I think I’ll stick with the news summaries – they will no doubt get too far into the weeds for a layman.)
Just listened to some of their press conference. Six of the nine commissioners were present. I’m familiar with three of those, impressive people and honest brokers. Phil Angelides, former Sen. Bob Graham (also former FL governor) and Brooksley Born, who famously warned from her post inside the Clinton administration  about the impending subprime crisis but her warnings were opposed by other regulators and Congress.

The Commission comes down hard on the failure of ‘senior public officials’ to do their jobs, on the rating agencies, on regulators (“regulators didn’t understand the markets they were regulating”), and on the compensation system that rewarded risk. They said they had referred to the Justice Dept any names and instances that might indicate criminal activity, but were firm that they were tasked only with studying what led to the crisis. It is not their role, they emphasized, to either comment on or pursue criminal matters.

The closest they came to ‘naming names’  in a somewhat derogatory tone, were Alan Greenspan and Goldman Sacks – and even then you had to listen real hard. There was frequent mention of the “shadow banking system” and the devastating effect it had on the financial health of the US economy.

Other mentions: laissez-faire, gutting of regulations that protected us for most of the 20th century – now have 19th century safeguards.In many respects, our system is still as it was on eve of this crisis.” Too much risk with too little capital, companies were over leveraged.  “These companies got too big to manage, not just too big to fail.”

Perfunctory mention of US households taking on too much debt but the brunt of their findings implicate the investment banks, the financial industry surrounding them, and the Federal Government.

 So it’s a good thing we’ve been fighting these wars to keep us safe.