Report: Financial crisis panel casts wide net of blame

After 19 days of hearings and more than 700 interviews, the congressional inquiry determined that the crisis could have been averted, and was “the result of human action and inaction, not of Mother Nature or computer models gone haywire.”

The 576-page report, which will be sold in bookstores, faults former Federal Reserve Chairman Alan Greenspan and current Chairman Ben Bernanke for their roles in the crisis, taking the former to task for pushing for financial deregulation.

It also says the Bush administration was inconsistent in its handling of the crisis, saying it created uncertainty in the market by allowing Lehman Brothers to go bankrupt after stepping in to save Bear Stearns. The Clinton administration is also taken to task, as the report contends that a 2000 decision to protect over-the-counter derivatives from regulation was “a key turning point in the march toward the financial crisis.”

It also says various federal financial regulators, including the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Fed, played contributing roles in the lead-up to the crisis.

The report also criticizes several financial executives for failing to appreciate the risks of their investments, as they excessively speculated while failing to preserve enough capital to cover anything beyond the smallest of losses.

However, the official FCIC findings were not endorsed by all panel members. The six Democrats on the panel approved the study, while the four Republicans have prepared dissenting reports. 

While conservatives have long pointed the finger at mortgage giants Fannie Mae and Freddie Mac for playing a leading role in the crisis, the report found that while their struggles contributed to the crisis, they were not the primary culprit, adding that aggressive home-ownership goals set by the government did not play a major role.