Congressional Commission to Investigate the Financial Crisis
In what might be the best taxpayer investment in history a congressional commission will seek to find answers regarding the 2008 financial collapse. The 10 person commission will examine the financial crisis to see what we as a country might be able to learn. I’m hoping it turns out to be a valuable lesson.
Core Issues
The panel has been directed to look at 22 different, unknown, issues surrounding the financial crisis. Many people are expecting that the panel will focus mostly on the housing problems and the sub-prime mortgage boom. I’m expecting most of the blame to be put on the financial industry, though as many have found, much of the financial crisis was forced by Congress – pushing banks to lend to practically anyone.
What drove the Housing Bubble
The House Financial Services committee found that many people were unable to get loans prior to the real estate bubble. In particular were low income families (duh) and often minorities, who as a demographic were finding themselves with poor credit scores. The committee then pushed forward with legislation and created its own “housing crisis” stating that Americans could not access affordable housing. To make a long story short, the government practically forced banks to make loans to people who couldn’t previously get them and then subsidized the loans by buying them through Fannie and Freddie. Of course, the self fulfilling prophecy of continuously increasing home values went down the toilet with mortgage backed securities. We all know that story.
What We’ll Probably Find
I hate to say it, but Congress is going to find only what its looking for. It is my guess that Congress will declare the financial services industry needs sweeping regulations and new laws regarding leveraged and high risk investments. In reality, these laws would only be necessary if it is the intention to continue to bail out the sector as it fails. There is no sense in protecting someone or something from its own harm, in a free society and free market, if there is no risk of loss other than those who choose to partake. It is unlikely, though, that kind of logic will land in the minds of legislators, who through legislation, seek to protect us from ourselves.
December 2010
The final report won’t be issued until December 2010 and it is until that time that any of this is likely to be made public. Under the guise of protecting investors, much of the bailout and other huge pieces of legislation have been kept in the shadows. This report could be make or break. It could expose lies, corruption and fraud or it just might settle on a general overview. Unfortunately, it won’t be until 2010 that we truly see the depth of the investigation, and the subpoenas that make up the committee’s arsenal.
