The FCIC conclusions make this utterly clear. Here's a summary (also, see note below):
- The crisis could have been avoided through better supervision and monetary policy restraint.
- More regulation, particularly of the "shadow banking system," would have helped.
- Risk management failed.
- Banks took too much risk and weren't transparent enough about it.
- The government wasn't prepared to deal with the mess.
- There was a breakdown of accountability and ethics.
Of course, within those bullet points, there were lots of things mentioned like dangerous derivatives, subprime mortgage expansion, Fannie Mae and Freddie Mac, securitization, and other terms you've probably heard before described in relation to the crisis. In fact, if there are any ideas above that you haven't heard talked to death by pundits, reporters, politicians, and academics, then you haven't been paying attention. There's nothing very new here.
There's nothing very focused here either. That was a major, and legitimate, complaint of the Republican members' dissent:
The majority's approach to explaining the crisis suffers from the opposite problem -- it is too broad. Not everything that went wrong during the financial crisis caused the crisis, and while some causes were essential, others had only a minor impact. Not every regulatory change related to housing or the financial system prior to the crisis was a cause. The majority's almost 550-page report is more an account of bad events than a focused explanation of what happened and why. When everything is important, nothing is.
Instead, the dissent provides 10 specific explanations to what caused the crisis:
1. Credit Bubble
2. Housing Bubble
3. Nontraditional mortgages
4. Credit ratings and securitization
5. Financial institutions concentration correlated risk
6. Leverage and liquidity risk
7. Risk of contagion
8. Common shock
9. Financial shock and panic
10. Financial crisis causes economic crisis
This is a little more focused, which is good. There was also an additional dissent from free market think-tanker Peter
Wallison blaming government housing policy entirely, which is likely a
little too focused. But again, in both cases there doesn't appear to be a lot of novelty there.
And that was the essential problem with the FCIC's purpose from the start. It's fine to talk through all of the mistakes that were made and problems that existed prior to the crisis, but if we're learning little that we didn't already know without the commission, then what's the point? The fact that the report was published along politically ideological lines magnifies its uselessness. If the commission didn't even manage to come to a broad agreement on the causes, how can the public trust that either side gets it right?
Note: I probably should have added the following additional causes that the FCIC cites in its report, though has them as secondary causes to those already mentioned. These are all also well-known by now, so the thesis above is the same, but readers who are interested to understand the FCIC's summary may find this expanded list useful:
- Collapsing mortgage standards and too much mortgage securitization
- Too much over-the-counter derivatives with weak oversight
- Credit rating agency conflicts-of-interest