The Financial Crisis Inquiry Commission’s Final Report:
Five years ago this week, the Financial Crisis Inquiry Commission (FCIC), which conducted the nation’s official inquiry into the causes of the financial and economic crisis of 2008, made public the results of its investigation. On January 27, 2011, the FCIC presented its final report to the President and Congress and on February 10, 2011, it released nearly 2,000 key documents, hundreds of interviews, and other materials related to its investigation.
In its final report, the FCIC concluded that the crisis was avoidable and was caused by:
- Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages;
- Dramatic breakdowns in corporate responsibility including recklessness and excessive risk taking by Wall Street ;
- Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw;
- And systemic breaches in accountability and ethics at all levels, including pervasive fraud and corruption in the mortgage markets.
In addition, the report identified specific components of the financial system that contributed significantly to the financial meltdown including collapsing mortgage-lending standards and a mortgage securitization pipeline that lit and spread the flame of contagion; over-the-counter derivatives that contributed to and amplified the crisis; and credit rating agencies that were essential cogs in the wheel of financial destruction.
Finally, where the FCIC found potential violations of law, it referred those matters to the Department of Justice.
Five Years Later:
Five years later, the nation is still grappling with the aftermath of the crisis and the role of Wall Street in our economy is at the center of the 2016 national electoral debate. While significant reforms have been put in place in the wake of the crisis, substantial challenges and risks still remain. The nation’s biggest banks are bigger than ever, with a greater concentration of assets than before the crisis. Compensation on Wall Street has rebounded to record levels. There have been no real legal, economic, or political consequences for the senior executives of the financial firms that crashed the economy and thus little fundamental change in the culture and practices of the financial sector. And, Wall Street and its allies in Congress continue to wage a fierce, well-funded, rear guard action against financial reform.
Additional background on the FCIC:
The FCIC was created to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The 10 member Commission was established as part of the Fraud Enforcement and Recovery Act (Public Law 111-21) passed by Congress and signed by President Obama in May 2009. Six members of the Commission were appointed by the Democratic leadership of Congress and four by the Republican leadership.