Friday, December 17, 2010

FCIC Republicans "We Can't Handle the Truth"

The Republicans members on the Financial Crisis Inquiry Commission have decided that they can't be bothered with actually figuring out why the global financial system nearly collapsed in 2008 if they might have to acknowledge that the incentives of the free markets might actually lead to perverse results upon occasion.   Instead they have decided to stick with blaming the government and liberals for everything that goes wrong anywhere in the world.  In this case, the Republican members of the FCIC have issued their own report on the financial crisis that absolves Wall Street and places the blame for the housing bubble on the Community Redevelopment Act, Fannie Mae, and Freddie Mac.

The word "deregulation" is not found in the Republican report.  There is no mention of the Commodities Futures Modernization Act of 2000 which prevented the Commodity Futures Trading Commission from undertaking any regulation of over-the-counter derivatives like credit default swaps. There is no mention of the SEC's decision in 2004 to exempt Bear Stearns, Lehman Brothers, Goldman Sachs, Merrill Lynch, and Morgan Stanley from net capitalization rules permitting them to increase their leverage rations to previously unknown levels. There is no mention of the repeal of Glass Steagall. There is no the hands-off philosophy that guided the Federal Reserve Board under the chairmanship of Alan Greenspan.

For a nice summary of the issues to which the Republicans closed their eyes in an "exercise in willful ignorance," see 10 Questions for GOP Members of Financial Crisis Inquiry by Barry Ritholtz at  The Big Picture.

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