Jonathan Weil has a bizarrely headlined column titled “Wall Street’s Collapse to Be Mystery Forever.

Balderdash!

That is a euphemism; what I really want to write would get this post blocked from Goldman Sachs, thanks to their new email nanny. Suffice it to say my linguistical first choice is a sensible investment thesis, given the recent rise in Ag products and farmland.

You need only read the FCIC report’s executive summary (here, pages 15-28) to see that they got the broad strokes right, and blamed the right people, institutions and policies.

What Weil gets right is that there were serious flaws in the design of the FCIC as a bi-partisan commission:

“To examine the causes of the financial crisis, Congress created a bipartisan panel of 10 political appointees led by Democrat Phil Angelides, a former California state treasurer. What was needed was a nonpartisan investigation directed by seasoned prosecutors (like Pecora was) who know how to cross-examine witnesses and get answers.

Whereas Pecora had no fixed deadline, Congress gave the crisis commission until December 2010 to complete its inquiry. Witnesses who didn’t want to cooperate fully could simply milk the clock. The panel got a budget of less than $10 million to investigate all the causes of the financial crisis. Lehman’s bankruptcy examiner got $42 million to produce a 2,200-page report on the failure of a single company.”

Blame Obama for not being more forceful in the creation of a Pecora-like commission. But Weil is dead on with that assessment. He adds:

“The report’s conclusions were obvious: The financial crisis was man-made and avoidable. Regulators and credit-rating companies blew it. Banks and homeowners borrowed too much. Companies such as AIG and Lehman Brothers had horrible governance. Ethics and accountability broke down. The government panicked when the crisis hit in 2008. And so forth.”

Well, that much was obvious to me, and perhaps to him and others. But many people did not understand that prior to the FCIC.

Was the report a “predictable failure” ? I don’t think so. It put the official imprimatur of what happened into black and white. Further, knowledgeable observers with a familiarity of what caused the crisis can now look at the partisans who tried to submarine the commission from the outset for the hard core ideological extremists they are, clinging to a disproven world view regardless of consequences.

Shame on them.

>

Previously:
10 Questions for GOP Members of Financial Crisis Inquiry (December 16th, 2010)

Source:
Wall Street’s Collapse to Be Mystery Forever
Jonathan Weil
Bloomberg, January 28 2011

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ayZQBEkgQmK8

Category: Bailouts, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

33 Responses to “No Mystery At All . . .”

  1. Mannwich says:

    How convenient for all that are responsible. It’s now “a mystery”. Like I said, “telling the truth” is what’s hard, especially for those who have a vested interest in doing otherwise (that includes people like Weill).

  2. Moss says:

    This is very simple to explain, TPTB want it to be perceived as a mystery. The real mystery would be if the factual truth was told.

  3. obsvr-1 says:

    The title shoud be:

    Why no prosecutions or convictions from Wall Street’s Collapse to Be Mystery Forever.

  4. Francois says:

    Barry,

    I have to agree with Yves Smith here: Officialdumb won again, they even subverted Brooksely Born.
    http://xrl.in/7405

    The FCIC is a complete whitewash. Not ONCE, does the report dare to use the “F” (fraud) or “C” (crime) word. Everybody is to blame, ergo, no one is to blame.
    http://xrl.in/7403

    Memo from Wall Street to DC: Above all, do NOT reform the system, do NOT change the players, do NOT reign in the worst abuses: We, the Elites, like it too much that way! So do you, Bitchez, since We finance your re-elections. So, be polite and pray bend over on command.

  5. I disagree — the official report blames the right people, places and things.

    Our cynicism about Wall Street / Govt is such that we cannot even see when someone does the right thing

  6. Indeed Francois. Weil’s right. The FCIC was never about doing anything. It was about appearing to be doing something. Which pretty much summarizes the essence of government initiatives so far as the economy is concerned.

  7. DeDude says:

    For idiots like Jonathan everything will be a mystery forever. For any body with half a brain it’s not like rocket science.

  8. AHodge says:

    completely agree
    a decent report naming names
    in no way excuses them from

    1)tough questioning cassano fuld all testifyers got a complete disgraceful pass– even if named later
    2) decent analysis of the structure, what flaws and failures, more than who was bad.
    3) some organized thought on reform needs-if even by implication?

  9. hue says:

    what is missing is a midget in a tent http://bit.ly/gk3kcH

  10. for a compare & contrast..

    Byline: THE WASHINGTON POST

    WASHINGTON — Independent counsel Kenneth Starr spent $6.2 million during the six months last year when he was deposing former White House intern Monica Lewinsky and concluding his impeachment case against President Clinton, according to the General Accounting Office.

    http://www.highbeam.com/doc/1G1-68445002.html

  11. BR, what you see as cynicism, I see as clear-eyed objectivism. I will allow I am a skeptic. I believe none of what I hear and only about half of what I see, without corroborating proof. Skepticism, though, is the foundation of rational inquiry.

    I haven’t any opinion on whether this commission “[did] the right thing”. But, however it rates according to a value judgment such at you proffer, it appears to me that its true purpose was to look as if it were doing something, when in fact it wasn’t, or at least, it wasn’t doing or saying anything that hadn’t been done and said before.

  12. Mannwich says:

    I have to agree with Curmudgeon and Francois, BR. Sorry, there are times when one cannot be cynical enough. This is clearly one of those instances.

  13. Mannwich says:

    @Hoffer: LOL. That is perfect.

  14. singfoom says:

    I disagree with you slightly BR. I agree that the report got most things right, but what’s the point of assigning blame if you’re not going to do anything about it? Crimes were committed. They should be prosecuted to the fullest extent of the law. That’s the only way that others will get the message.

    When I see high level executives involved in the disaster doing a perp walk, then I’ll believe that someone “did the right thing”. Until then, I see rule of law for the little people and “mistakes were made” for the Masters of the Universe.

    ~~~

    BR: That is the responsibility of the Attorney General, SEC and Congress — not the FCIC

  15. budhak0n says:

    I don’t think any of this is Rocket Science. I just tend to wonder about what it all means moving forward.

  16. budhak0n says:

    @BR the SEC has been a pretty meaningless organization for a couple of decades now.

  17. DeDude says:

    I think people are expecting the FCIC to do things it was never charged or given resources to do. With the limited money and stringent time limit, there is certainly reasons to believe that they were intended to produce a “whitewash” or “nobody-could-have-predicted” report. The fact that they instead gave us a report that points to a large number of the problems that produced the crisis is quite impressive. The glass is half full not half empty, and those who expected a full glass for that price are living in lalaland.

  18. Wes Schott says:

    …there will be no perp walks for the too big to fails

    …since they are too big to fail – they were, after all, bailed out, then you cannot take down those in charge of the banks…

    …if there were perp walks, the banks shares would fall, and if the shares fall, and the shorts pile on, that will counter act the effort to recapitalize and perhaps leads to bank failure…which cannot happen once the TBTF doctrine has been established…ain’t gonna happen…

  19. Mannwich says:

    Agreed Wes. However, if they will always have gov’t-backing, their employees need to be paid like gov’t employees, no?

  20. budhak0n says:

    The Commission didn’t do the Right or the Wrong thing. They did the thing they were charged to do. Sounds strange and counter intuitive but really how else do you explain it?

    Wow Egypt looks like it’s about to pop eh?

  21. A says:

    President Obama was right in implying that America does not want to sit 2nd to any country, in any category – including corruption.

  22. Wes Schott says:

    Manny, that was the Taleb concept – turn the banks into “utilities”…too late now, maybe next time,..not.

  23. Mannwich says:

    @Wes: Exactly, but my guess is the “next time” it will be too late.

  24. dss says:

    And those Monica Lewinsky depositions were in 1990′s dollars.

  25. Petey Wheatstraw says:

    Everybody already knows what happened: Deregulation and lack of law enforcement led to a massive criminal enterprise encompassing the entire financial system, brought about and furthered by the inflation of credit issued to unqualified borrowers, in the form of mortgages against fraudulently valued real estate, which were then cashed out via the illegal and improper process of debt ratings and securitization.

    Everybody who touched this shit was and is a criminal.

  26. budhak0n says:

    @ Mannwich. Well we do face a monumental generational “issue” but it’s slowly correcting itself. Patience Young Jedi. Patience.

  27. budhak0n says:

    I disagree that anything criminal went on at all. It’s probably my background but I completely accepted Blankfein’s explanation that these were “accredited” investors who should’ve ought to have known better.

    I know I’m in the minority but hey them’s the breaks.

    If you’re participating in a risk venture, there’s a certain amount of inherent risk. And it doesn’t really stop anywhere. For people out there who say that the Banks get off scott free. How so exactly?

    If you’re a bank and you extended company capital, and took a massive haircut, how are they getting away with anything? Sorry I’m not buying it.

    I think we have a lot of individual borrowers who want access to the fed window but as we all know that’s never going to happen. If it does , let me know, I’m first in line.

  28. JimRino says:

    Has their been any True Rating Agency changes?

  29. Petey Wheatstraw says:

    budhak0n Says:

    “If you’re a bank and you extended company capital, and took a massive haircut, how are they getting away with anything? Sorry I’m not buying it.”
    ___________

    A haircut?

  30. formerlawyer says:

    A “conservative’s” take on the FCIC report:

    http://www.frumforum.com/wall-streets-meltdown-whos-to-blame

  31. techy says:

    Below is from a comment in marketwatCh — http://www.marketwatch.com/story/real-gdp-at-new-all-time-high-2011-01-28#comment5235502

    IS THIS TRUE??

    The avg. family was making Union wages and we were exporting twice as much as we were importing.The latter all started in the reverse when
    REAGAN came to town and took a 900 BILLION Dollar on the books deficit that took over 200 YEARS to build up and triple it to way over THREE TRILLION by the time he left office{He now a Nation Hero of conservative } office

    and Bush2 TRIPLE REAGAN recording breaking DEFICIT spending by adding NINE TRILLION{through FY 2009 last Bush2 FY sign off} breaking another World Record. It ‘s is now all Obama fault!

  32. Transor Z says:

    If only Feynman had been on the FCIC…

    http://www.ralentz.com/old/space/feynman-report.html

    “It would appear that, for whatever purpose, be it for internal or external consumption, the management of NASA exaggerates the reliability of its product, to the point of fantasy.”