Causes of the Financial Crisis

by Jeff Sovern

The Republican Commissioners on the Financial Crisis Inquiry Commission have issued their preliminary findings and conclusions on the causes of the financial crisis in a document titled “Financial Crisis Primer: Questions and Answers on the Causes of the Financial Crisis.”  As the subtitle suggests, the Primer is organized into a series of questions and answers. It mostly address why lenders were willing to make so many bad loans (surprise!  it was the government's fault), and how the crisis spread through the economy.  Here are a couple of questions that got left out of the Primer: did consumers understand the terms of the loans on which they would later default? Were consumers deceived into taking out the loans on which they would later default? 

Comments

[Alan White]

Paul Krugman's NY Times column today (http://www.nytimes.com/2010/12/17/opinion/17krugman.html?partner=rssnyt&emc=rss) takes apart the meltdown of the FCIC and the minority Republican members' attempt to remove all facts from the final report. Where have you gone, Ferdinand Pecora?