A deeply divided US investigative panel issued a scathing critique of the culture of deregulation championed by Former Federal Reserve Chairman Alan Greenspan, saying the government had ample power to avert the financial crisis of 2007-2009 and chose not to use it.
The 10-member Financial Crisis Inquiry Commission's final report, released on Thursday, was endorsed only by its six Democratic members, undermining its impact as the post-crisis Dodd-Frank law banking reforms are being implemented. In the fight between pro-reform Democrats and anti-reform Republicans, the report and its accompanying dissents provide fodder for both sides, while highlighting partisan fault lines that today pervade political Washington, from financial regulation, to health care, to addressing the budget deficit.
A competing minority report from three Republican commission members, also released on Thursday, largely exonerates Greenspan, saying, "US monetary policy may have contributed to the credit bubble but did not cause it." Another report, from the commission's fourth Republican, focuses mostly on US housing policy in explaining the origins of the crisis that rocked global markets and dragged the economy into a deep recession.
The unveiling of the three reports produced by the commission's warring members was seen by financial markets as a non-event. "The market is not really going to react - the market already has a very good idea of what happened," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel Inc in Cincinnati, which owns bank shares. The mountain of interview notes and internal documents obtained by the panel, however, contained some revelations.
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