Bankers, regulators, government – even homeowners – all to blame for credit crunch

[The Straight Story]

Financial crisis was 'avoidable', says official US report

Bankers, regulators, government – even homeowners – all to blame for credit crunch, says Financial Crisis Inquiry Commission


Wall Street bankers, regulators, government officials and even homeowners all share part of the blame for the 2008 financial crisis, according to a scathing US official investigation into the meltdown published today.

The 545-page Financial Crisis Inquiry Commission (FCIC) report reads like a financial thriller in which there are very few heroes. One chapter on the boom and bust fiasco is entitled "The Madness".

The commission concludes that the crisis was avoidable and was caused by:

• Widespread failures in financial regulation, including the Federal Reserve's failure to stem the "tide of toxic mortgages".

• Dramatic breakdowns in corporate governance, with too many firms acting recklessly and taking on too much risk.

• An explosive mix of excessive borrowing and risk by households and Wall Street.

• Policymakers who were ill-prepared for the crisis and lacked a "full understanding of the financial system they oversaw".

• Systemic breaches of accountability and ethics at all levels. Mortgage-holders took out loans they never intended to pay; lenders made loans they knew the borrowers could not afford.

http://www.guardian.co.uk/business/2011/jan/27/financial-crisis-avoidable-fcic-report