The Financial Crisis Inquiry Commission issued a report Thursday that pointed to multiple reasons for the meltdown. But the commission’s findings were split along partisan lines. The six Democrats on the panel agreed with the report’s findings. The four Republicans dissented. Here are key findings from both groups.
— The financial crisis was avoidable. Wall Street engaged in risky practices and lenders pushed high-risk mortgages. At the same time, government officials permitted the risky investments to flourish.
— The government prepared poorly and responded inconsistently to the crisis, causing panic in the financial markets. For example, it rescued Bear Stearns in March 2008 by brokering a sale to JPMorgan Chase. But in the fall, it put housing giants Fannie Mae and Freddie Mac in conservatorship. The government let Lehman Brothers collapse. But it gave American International Group financial support. Another major factor was that the Federal Reserve failed to stop the flow of risky subprime mortgages.
The Fed could have done this by imposing higher standards on lenders. Accountability and ethics among lenders and financial firms and throughout the financial system broke down.
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