{"id":687,"date":"2011-01-29T11:55:19","date_gmt":"2011-01-29T16:55:19","guid":{"rendered":"http:\/\/www3.law.harvard.edu\/journals\/hlpr\/?p=687"},"modified":"2015-10-02T15:58:31","modified_gmt":"2015-10-02T15:58:31","slug":"coming-to-terms-with-the-crisis","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/lpr\/2011\/01\/29\/coming-to-terms-with-the-crisis\/","title":{"rendered":"Coming to Terms with the Crisis"},"content":{"rendered":"

Anthony Kammer<\/em><\/p>\n

Earlier this week,\u00a0the Financial Crisis Inquiry Commission (FCIC<\/a>) issued a\u00a0report<\/a>\u00a0of its inquiry into the causes of the recent financial crisis. Modeled after the bipartisan 9\/11 Commission created to examine the background of the 9\/11 attacks, the FCIC was established by Congress in 2009\u00a0as a\u00a0bipartisan<\/a>\u00a0panel designed to investigate the causes of the country\u2019s recent financial crisis.\u00a0According to the Commission\u2019s report, critical to avoiding a repeat of the crisis is rejecting \u201cthe refrain that no one could have seen this coming and thus nothing could have been done.\u201d<\/p>\n

Although the Commission was somewhat split along partisan lines, the majority of the members agreed that the crisis was \u201cavoidable\u201d and identified a number of the entities most responsible.\u00a0The following are the headings summarizing the Commission\u2019s findings and conclusions:<\/p>\n

<\/p>\n

\u2022 We conclude this financial crisis was avoidable.
\n\u2022 We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation\u2019s financial markets.
\n\u2022 We conclude dramatic failures of corporate governance and risk management at many systemically important inancial institutions were a key cause of this crisis.
\n\u2022 We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.
\n\u2022 We conclude the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.
\n\u2022 We conclude there was a systemic breakdown in accountability and ethics.
\n\u2022 We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.
\n\u2022 We conclude over-the-counter derivatives contributed significantly to this crisis.
\n\u2022 We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.<\/p>\n

The FCIC additionally\u00a0referred<\/a>\u00a0several cases of potential wrongdoing to the Department of Justice, but it remains\u00a0uncertain<\/a>\u00a0whether any charges will made, even though many of the conflicts of interest that exacerbated the crisis have been well understood and discussed for months.<\/p>\n

Although the panel was unable to reach complete agreement, the dissenters did acknowledge failures in regulation, the over-concentration of risk, nontraditional mortgage practices, and failures in credit ratings and securitization. The main dissenting report, filed by three republican-appointed members, seemed chiefly to disagree with the majority\u2019s explanations that failed to explain the near-identical crises that affected a number of European economies. One significant difference between the majority and minority of the panel,\u00a0according to one of the dissenters<\/a>, is that the majority viewed the financial crisis as avoidable.<\/p>\n

Whether or not the last crisis was foreseeable, the FCIC has gathered much information about how we can make our economy more stable going forward. Given the large number of common conclusions between the majority and minority, perhaps some modest bipartisan reform proposals will start to emerge<\/p>\n","protected":false},"excerpt":{"rendered":"

Anthony Kammer Earlier this week,\u00a0the Financial Crisis Inquiry Commission (FCIC) issued a\u00a0report\u00a0of its inquiry into the causes of the recent […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-687","post","type-post","status-publish","format-standard","hentry","category-blog"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZQka-b5","_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/comments?post=687"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/687\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/media?parent=687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/categories?post=687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/tags?post=687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}