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Financial Crisis Commission Splits on Report

December 21, 2010

The federal commission investigating the causes behind the 2008 financial crisis has blown its original deadline of last week for delivering a final report, but its Republican members have instead released a pre-report of their own.

The Financial Crisis Inquiry Commission has been divided by internal, mostly partisan, disputes practically since its initial hearing. The 10-member commission was created by Congress last year and charged with examining the causes behind the financial meltdown. While the commission has managed to conduct a series of high-profile hearings in which it grilled financial executives over the failings of their banks and firms, it has also seen a number of departures of key staff members.

That contributed to the decision by the commission, chaired by Democrat Phil Angelides, a former California State Treasurer, to delay the date of the final report from the congressionally required December 15 to sometime next month. The postponement provoked outrage on the part of the Republican members of the commission, led by vice chairman Bill Thomas, a former member of Congress, whose dissatisfaction has been brewing steadily over the past year.

The four Republican members decided last week to release their own nine-page version of the report, entitled “Financial Crisis Primer,” through a think tank called the American Action Forum. In the process, they also have effectively disowned the “final” version of the report that the Democratic-led commission now plans to release in January.

They are concerned that the final report will end up putting the blame on Wall Street for the financial crisis, whereas they believe the blame should be placed instead on government-sponsored housing agencies like Fannie Mae and Freddie Mac, and the affordable housing goals of the Clinton and second Bush administrations.  The Republican commission members even voted in private to ban phrases like “Wall Street,” “shadow banking,” “interconnection,” “deregulation,” “magic,” and “alchemy” from the final report. (It’s probably a good thing they don’t have the power to edit J.K. Rowling’s Harry Potter books over at Scholastic.)

The decision to release a separate “presponse” to the report has been criticized in some circles for unnecessarily politicizing the panel and its report. However, the Republican members of the commission apparently felt strongly enough that their input wasn’t being heard, and they clearly didn’t want their conclusions to be buried inside some appendix to the final report.

In any case, the brouhaha has served to keep the commission in the headlines a bit more, which is probably a good thing because most Americans probably have no idea that a Financial Crisis Inquiry Commission even exists. Unlike the 9/11 Commission, whose report was eagerly anticipated and whose chairman and vice chairman, former New Jersey Republican Governor Tom Kean and former Democratic Congressman Lee Atwater, regularly appeared on TV together on the Sunday chat shows and evening newscasts, Angelides and Thomas apparently have trouble even being in the same room together. It’s unlikely their report will hit The New York Times best-seller list like the 9/11 Commission Report.

But maybe it’s better to have a couple of competing “official” versions of the events behind the financial crisis. After all, nobody is insisting that Andrew Ross Sorkin’s best-seller “Too Big to Fail” agree in every respect and conclusion with another popular book about the financial crisis like Michael Lewis’s “The Big Short.” The causes behind the 2008 financial crisis will be debated for many years to come. Historians and economists (as well as politicians) are still debating the causes behind the stock market crash of 1929.

The commission’s final report, whenever it’s finally delivered, surely will not be the final word.

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