Financial Crisis Was Avoidable

The financial crisis was avoidable, according to the final report from the bipartisan panel appointed by President Obama. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” it says, laying much of the blame at the feet of SEC and Federal Reserve chairmen Alan Greenspan and Ben Bernanke (who it also says was crucial in responding to the emergency), as well as the Bush administration for its inconsistent responses—for example, allowing Lehman Brothers to fail after it had earlier saved Bear Stearns. Timothy Geithner also comes under fire for missing signs of trouble at Citigroup and Lehman when he was the president of the New York Federal Reserve, while Democrats are criticized for exempting derivatives from financial regulation during the Clinton years. Still, despite this wide net of blame, only the panel’s six Democrats signed on to the final report; three Republicans issued their own report focusing on a narrower set of causes, while Republican Peter Wallison issused his own report focusing on government home-ownership policies—policies that, the main report says, were not major culprits.