The Financial Crisis Inquiry Commission has issued a report concluding that the 2008 financial crisis was “avoidable” and was caused by shoddy mortgage lending, the excessive packaging and sale of loans to investors, and heedless risk-taking on mortgage-backed securities by Wall Street, as well as regulatory failures, according to Sewell Chan in his New York Times article, “Financial Crisis Was Avoidable, Inquiry Finds.”
Wall Street firms routinely argue to FINRA arbitration panels that they are not responsible for their customers’ losses because the financial crisis was “unprecedented” and no one could have seen it coming. But according to the Commission report: “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the Commission concluded, adding: “If we accept this notion, it will happen again.”
The Commission further found that “aggressive homeownership goals,” low interest rates, Fannie Mae, Freddie Mac were NOT major culprits. It did find that the SEC was culpable in failing to require big banks to hold more capital to cushion potential losses and halt risky practices, and that the Federal Reserve “neglected its mission.”
“The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire,” the report states. “The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.”
The Commission report is based on 19 days of hearings and interviews with more than 700 witnesses. The Commission reportedly plans to release transcripts and other materials online.
Page Perry has over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.