The GOP's Epic Financial Crisis Commission Fail
On Wednesday morning, I told you about Shahien Nasiripour's warning that Republicans on the Financial Crisis Inquiry Commission—the group charged with investigating the cause of the financial crisis—were about to issue a report embracing the bogus claim that Fannie Mae, Freddie Mac, and loans to blacks and Hispanics were responsible for the collapse. Well, the report is out, and it's worse than we thought.
Remember, the Republicans on this commission are supposed to be the responsible, informed, and above all serious types who deserve to handle complex tasks like investigating and explaining the causes of the crisis. We're talking about people like Douglas Holtz-Eakin, who ran the non-partisan Congressional Budget Office, and Keith Hennessey, who headed the National Economic Council. They're supposed to be wonks—Republican-leaning wonks, but wonks nonetheless. They're not supposed to be hardcore partisan hacks. That's why it's so disappointing to see them issue such an incomplete, misleading, half-assed, throwaway "report."
As Nasiripour's reporting anticipated, the words that most people associate with the financial crisis—"Wall Street", "interconnected", "shadow banking", "deregulation", credit default swap—are absent from the Republicans' report. The word "derivative" is nowhere to be found. (TPM's Megan Carpentier has a great list of over a dozen other items in the commission's mandate that the GOPers simply ignored.) Meanwhile, the conclusion of the nine-page, three-footnote report focuses on an issue almost entirely divorced from the causes of the financial crisis: the federal budget deficit. "We caution our nation's leaders to learn the appropriate lessons from history and take seriously the need to reduce our federal deficit," the GOPers conclude. A large portion of the document, meanwhile, focuses on just what Nasiripour predicted it would: falsely blaming Fannie, Freddie, and lending to minorities for causing the crisis.
Is this seriously the best they have to offer? Any semi-competent RedState poster could have summarized the book This Time It's Different and rehashed old attacks on the Community Reinvestment Act and Fannie and Freddie. Why are these guys wasting their time—and ours—doing it? If you're going to break away from the rest of the FCIC and draft your own report, the least people should expect is that you do a halfway competent job.
As Mike Konczal says, this effort would have earned an undergraduate a D+. And while the GOP report is undoubtedly a failure as an explanation for the crisis, it's not even a success as a political document. Most liberals could have written a report that would be both more accurate and more critical of Democrats. As I wrote earlier, it's not as if either party did a particularly stellar job of regulating the economy and the financial sector over the past few decades. I'm sure that people like Konczal and Dean Baker will have more on this later (UPDATE: Here's Konczal), but for now, I'll give you what the Republican commissioners have to say about their own report:
This document adds to that conversation rather than closing it. The two seminal works on the causes of the Great Depression, Milton Friedman and Anna Schwartz’s A Monetary History of the United States, 1867–1960 and Ben Bernanke's "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression," were published in 1963 and 1983, respectively, many decades after the crisis had ended. We anticipate that future generations will continue to provide additional insights into the causes of this financial crisis as well.
We had better hope someone provides some additional insights. Because what this report is offering is just not going to cut it.