Then many months later [the Commission] issued another report for the bookshelves, destined only to gather dust next to hundreds of other reports of one catastrophe or another.
Remember that little financial meltdown we had just a few years ago? You know the one. Stock portfolio of American households lost a collective $XXX billion. Poof, gone. It was widely believed by knowledgeable insiders that we were on the precipice of a worldwide depression. Even the mighty Hank Paulsen was scared.
The government’s immediate response (which I supported) was TARP and the near-trillion dollar bailout. But according to the crisis playbook, Congress authorized (with much bluster and pomp) the formation of a Commission to get to the bottom of this threat so it doesn’t happen again. The usual suspects were rounded up—the Commission’s leaders are former California Treasurer Phil Angelides and 28-year congressman Bill Thomas—and they had a few hearings. Then many months later they issued another report for the bookshelves, destined only to gather dust next to hundreds of other reports of one catastrophe or another.
To be sure these well-meaning public servants did their best. I am not for a second suggesting they were somehow unduly influenced, biased or corrupt in any way. Rather they fell victim to the pasteurization of the bi-partisan political commission.
So, no surprise, the report is a yawn. Nothing particularly insightful. Heck if you want to understand the meltdown while enjoying a good read I recommend Joe Nocera and Bethany McLean’s All the Devils Are Here or Michael Lewis’ The Big Short.
Unfortunately the guys at the FCIC were not just writing a book. They had some enforcement authority. They had the power to root out the bad guys and send referrals to the Department of Justice. It has been widely reported that they may refer a few individuals for civil prosecution, but even that seems unlikely and who knows what DOJ will do.
Ok smart alec, who should be drawn and quartered, who should be sent up the river? The simple answer is someone, everyone, entire Departments, anyone. Criminal prosecutions have a way of getting people’s attention and changing behavior for a wide swath of people around the accused.
Specifics, give us specifics: okay how ‘bout those guys at Countrywide, all of whom knowingly engaged in a mortgage-backed orgy, day in and day out allowing anyone with a pen to sign for a no-doc mortgage. What of those Wall Street warriors who kept selling mortgage-backed securities long after they knew they had questionable value? And do you mean to tell me that no one at Fannie Mae or Freddie Mac had the facts but kept playing the game? That they weren’t hoping beyond hope that by the time the music stopped they would be long gone, enjoying a multimillion dollar pension.
Sadly, history will repeat itself. In the end financial meltdowns can be good business for many. Commissions are window dressing and just part of the playbook.