The national Financial Crisis Inquiry Commission of financial heavies has issued a split verdict about what caused the 2007-08 financial crisis and the resulting mass unemployment of 20 million Americans, after more than a year of hearings and study. The 10 members split three ways:
1) The six Democrats all blame government, and say this can be fixed.
2) Three Republicans blame the free market, and says you have to expect this sort of thing from time to time.
3) The other Republican blames Fannie Mae for being too generous to deadbeats.
The majority report blames:
- Alan Greenspan's Federal Reserve, and its New York branch back when current Treasury Secretary Timothy Geithner was running it, and their failure to monitor, discipline and control risky Wall Street mortgage investments;
- The Bush and Clinton administrations for caving into Wall Street's demands for easy regulation;
- Greed and a lack of basic risk management by leading Wall Street firms and the home loan mortgage industry.
Also, credit rating agencies (S&P and Moody's) who praised garbage loans so investors would buy them.
Fannie Mae and Freddie Mac were also run badly, but they weren't the "primary" cause of the mess, the majority found.
And most important: this was all preventable, if government were doing its job and not pretending the market always heals itself, and if investment bankers and mortgage lenders could be counted on to do their jobs ethically; which they couldn't.
Three of the GOP minority members issued a common dissent, which agreed with most of the majority's conclusions as to what happened, but was a lot less sweeping in assigning blame to the Fed or regulators or believing the crisis could have been prevented.
The Republicans basically blames housing price inflation and collapse, as if that were an act of nature, and not something government ought to have much prevented.
The last (GOP) commissioner issued an individual dissent blaming Fannie Mae, Freddie Mac, and Washington's over-liberal housing policy in the Clinton and Bush II administrations.