The Financial Crisis Inquiry Commission has been digging into some of the root causes behind the near collapse of the economy in the fall of 2008, and one largely forgotten episode came into focus in Wednesdays hearings.
Members of the commission tried to learn more about an IRS change on Sept. 30, 2008, that helped Wells Fargo purchase Wachovia by allowing banks to carry forward the losses from the acquisition of troubled financial institutions. The rule change also facilitated the acquisition of other failing financial institutions by seemingly stronger banks.
They changed the law for a specific group of institutions, said commission vice chairman Bill Thomas, according to American Banker. Did anyone think that was lawful?
At the time, lawmakers expressed outrage that they had not been consulted on the change, but at a time when the financial world seemed to be turned upside down, not much was done to re-examine what led up to the decision.
The Financial Crisis Inquiry Commission has reportedly been rocked by internal dissension and key staff departures, but if it is able to get to the bottom of these and other lingering questions, it will have fulfilled at least part of its original mandate.