FCIC Hearings
By Barry Ritholtz - January 15th, 2010, 9:59AM
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The Financial Crisis Inquiry Commission was created by the President on May 20, 2009 (via the Fraud Enforcement and Recovery Act of 2009).
The 10 member, bi-partisan Commission was established to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.”
This week hearings began. You can see PDFs of all of the witnesses written statements here.
Enjoy your weekend reading!
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January 15th, 2010 at 10:56 am
Here’s a nice little paragraph from Jamie Dimon’s testimony:
“We also misjudged the impact of more aggressive underwriting standards and should have acted
sooner and more substantially to reduce the loan-to-value ratios. We have substantially enhanced
our mortgage underwriting standards, returning to traditional 80% loan-to-value ratios and
requiring borrowers to document their income. We also closed down all business originated by
mortgage brokers. Our worst mistake over the past several years was not doing this sooner. In
general, credit losses in the broker-originated business are two to three times worse than that of
the business we originated ourselves.”
January 15th, 2010 at 12:57 pm
Thanks for posting this. I wonder if anyone done an assessment of the suitability of the various FCIC commissioners to this task …
January 15th, 2010 at 1:38 pm
I urge everyone who’s interested to read Kyle Bass’s testimony. He pretty much gets it all right, from both a technical standpoint and a moral one.
He makes some great points about why we gave Citi, for example, cash for equity instead of coming in as super senior creditors ahead of everyone else who stood to lose everything without our help.
He makes a similar point about Fannie and Freddie — rather than pour money into those black holes, why not simply nationalize them and let the bondholders go screw. (We all know that there was beaucoup politics going on there, but it’s never been discussed openly in public.)
Anyhow, Bass is on our side. His testimony is a good primer or refresher for anyone who’s interested.
January 15th, 2010 at 5:20 pm
And this is the way it is supposed to work when your government is not own by the bankers…
an. 15 (Bloomberg) — Deutsche Bank AG and OeBB-Holding AG, Austria’s state-owned railroad company, reached a settlement in a dispute regarding 613 million euros ($882 million) worth of derivatives.
Germany’s largest bank is receiving 295 million euros in return for dissolving the contract on collateralized debt obligations between the parties, the two companies said today in an e-mailed statement. The CDOs will revert to Frankfurt-based Deutsche Bank.
January 15th, 2010 at 5:53 pm
Photo of the proceedings here:
http://2.bp.blogspot.com/_0wRJjXvyZ1I/S06zKfloaVI/AAAAAAAAEp4/6wyrNLqjzV4/s1600-h/Jabba2.jpg
January 15th, 2010 at 10:19 pm
I particularly recommend watching the CSPAN broadcast of the 2nd panel which includes above mentioned Kyle Bass, though Peter Solomon delivers some zingers – their commentary on the first panel’s discussion is well worth watching -
http://www.cspan.org/Watch/Media/2010/01/13/HP/A/28382/Financial+Crisis+Inquiry+Commission++Day+One.aspx
January 16th, 2010 at 9:31 am
I noticed a particularly telling Freudian slip at approx 26:53 in the video of the first hearing.
http://www.c-spanvideo.org/program/291292-1
January 16th, 2010 at 6:10 pm
[...] Link to the PDF’s submitted by the Witnesses. There’s gotta be some lyrics in there somewhere. Hat tip to the direct link for the PDF’s to The Big Picture. [...]
January 16th, 2010 at 6:40 pm
about 59 minutes on day one’s testimony there is an exchange between blankfein & angelides where the chairman sez so a businessman or family with $50k in assets could borrow, in some cases, $2B ….yada yada. [talking about the incredible leverage] and blankfein has the audacity to reply, well duh – in retrospect that’s too much risk.