Washington’s Blog
January 28, 2011

The Financial Crisis Inquiry Commission largely blames Greenspan, Bernanke, Geithner, Summers, the rating agencies, SEC and big banks for the economic crisis. (Here’s the final report).

Bernanke is still Fed chief, and the government has substantially increased the Fed’s power in the last year.

Bernanke is still Fed chief, and the government has substantially increased the Fed’s power in the last year. See this, this, this, this and this.

Geithner is still Secretary of the Treasury.

Summers just resigned, being replaced by someone with a virtually identical philosophy, background and mindset as Summers.

The rating agencies are unrepentant, and have not been reined in. They are still government-sponsored monopolies which are accept bribes to give high ratings. And see this.

The SEC is still not acting as a real watchdog, and the banks are still speculating wildly with excessive leverage and acting as predators – instead of supporters – of the real (non-financial sector) economy.

Indeed, the banks are growing even larger, instead of being downsized, even though independent financial experts say that the very size of the banks is hurting the economy. The FCIC report doesn’t really tackle that issue (the phrase “too big to fail” does not appear in the report itself, only in a very peripheral way in the footnotes).

Nor does the report detail the fact that inequality in the U.S. is higher than it has been since 1917, and that inequality was one of the prime causes of the economic crisis. The FCIC does not even mention the words “inequality” or “oligarchy”, and mentions the word “oligopoly” only once (in a footnote) .

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And while the FCIC report discusses mortgage fraud, it does not dig deeply enough into fraud by the largest financial players, detail other types of financial fraud, or push hard enough for prosecution, even though fraud was one of the core causes of the financial crisis, and one of the main reasons that the economy has not stabilized.

For example, the report uses the word “fraud” 46 times, compared to 167 mentions of “leverage”. The phrases “control fraud”, “accounting fraud”, “regulatory capture”, “systemic fraud”, “criminal fraud” and “criminally negligent” do not appear anywhere in the report, nor do the words “looting” or “Ponzi”. The word “prosecute” appears only once (and only in a historical context), and the word “prosecution” appears only 6 times (and half of them are buried in footnotes). The word “corrupt” appears only twice (one of them in a footnote).

So – while the FCIC report looks impressive at first glance – it doesn’t hit hard enough, and is not going to lead to any real change.

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And see this, this and this, and this visual representation by Tyler Durden of the most frequently-used words in the report.


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