The federal commission that investigated the origins of the financial crisis is set to issue three competing conclusions this week
The federal commission that investigated the origins of the financial crisis is set to issue three competing conclusions this week.
The Financial Crisis Inquiry Commission's main report, to be released Thursday, is backed only by the panel's six Democratic appointees. The four Republicans have written two separate dissents, according to a blog post by one of them.
The differing narratives may further limit the commission's impact on financial regulation policy or on whom the government should hold accountable for the worst economic collapse since the Great Depression. The 2009 creation of the panel was touted by some lawmakers as the best way to determine what caused failures on Wall Street and in the mortgage and banking industries.
“It will make interesting reading, but I don't know anybody in a policy position who is waiting for” the report, said Wayne Abernathy, a former Treasury Department official who is now an executive vice president at the American Bankers Association. “They broke with the effort to form a consensus pretty early, and from then on, people started discounting their work.”
Congress set up the FCIC to delve into the causes of the meltdown that toppled Lehman Brothers Holdings Inc. and prompted U.S. bailouts for companies including American International Group Inc. The commission has taken testimony from executives including Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., and Lloyd Blankfein, chief executive of The Goldman Sachs Group Inc.
MILLIONS OF PAGES
The panel and its staff have reviewed “millions of pages of documents, interviewed more than 700 witnesses and held 19 days of public hearings,” according to a statement announcing the report's release.
The Democrats' final report cites a broad swath of failures as causes of the crisis, according to three people who have been briefed on the report or have seen parts of it. They blame greedy bankers and mortgage brokers, lax derivatives oversight, bumbling credit-rating firms, predatory lending, a lack of risk management at banks and decades of deregulation, said the three insiders, who spoke on condition of anonymity because the report isn't yet public.
The report will focus on “regulatory agencies such as the Federal Reserve and the Securities and Exchange Commission, as well as members of the overall financial community such as the ratings agencies and the investment banks, who put together these derivatives and then put a triple-A rating on them all before they were sold,” former Sen. Bob Graham, a Democratic commissioner, said in a December interview.
The main report will be available as a published book, as well as a free document on the web. The publishing schedule, according to people familiar with it, made it difficult for commissioners to review the final report in its entirety.
The book version, due at the publisher in mid-December, was delivered in early January, the people said. In their vote to approve the report, commissioners split along party lines, 6-4.
Each Republican was given nine pages in the commercial book to air his or her views, though each was given as much space as requested in the official report that will be posted online. That version will also be sent to Congress and President Barack Obama.
CAUSED A STIR
The panel's four Republicans caused a stir in December when they released a preliminary paper outlining their findings. The Democratic majority had voted over their objections to push the deadline for the report from December to the end of January.
Now the Republican unity has fractured, Keith Hennessey, a former assistant to President George W. Bush for economic policy, confirmed in a posting on his blog Wednesday. Though he didn't give details, Mr. Hennessey said that he had signed on to a 27-page dissent along with fellow Republicans Bill Thomas, the former California congressman who serves as the panel's vice chairman, and Douglas Holtz-Eakin, former head of the Congressional Budget Office and chief economic adviser to the 2008 presidential campaign of Sen. John McCain, R-Ariz.
The dissent will “supersede” the preliminary paper that came out last month, Mr. Hennessey said in his blog.
That initial document was written mainly by the other Republican on the panel, Peter Wallison. His final paper, which only he has endorsed, is a 43,000-word rebuttal to the Democrats' findings, three people with knowledge of the commission said.
