posted on 10 February 2016
Written by John Lounsbury
Econintersect: Philip Angelides, Chairman of the Financial Crisis Inquiry Commission (FCIC) which issued an official report in January 2011,has written a letter to the U.S. Department of Justice challenging U.S. Attorney General Loretta Lynch to prosecute senior bank executives before the statute of limitations on their crimes expires.
Angelides, a former Treasurer of California, headed the commission which issued a report which was widely criticized, both by those who felt is didn't go far enough (see references below) and by some commission members who felt it went too far and resulted in conflicting minority reports. The full report and both dissenting views are available here.
Here is what Angelides told the Financial Times this week:
At the time the Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States was released (January 2011) there were criticisms that the document made no specific referrals to the Justice Department, made only general reference to possibility that there might be criminal activity to investigate. It may be suggested that to do more would have carried little import in light of the fact that the commission was split, with only six commissioners voting to adopt the official report while four dissented.
The dissention was divided along party lines. The commission members were not operating from the same basic assumptions. The majority expressed the opinion that the source of the crisis stemmed from systemic sources. Here is brief excerpt:
The two minority reports had a different basis. From the minority report by Keith Hennessey, Douglas Holtz-Eakin and Bill Thomas the thrust was not that there were systemic problems but that the source of the crisis came from specific "defects" in specified corporate functions and government policies. A brief excerpt:
The minority report by Peter J. Wallison had an even narrower focus - the crisis was caused by government fairness in mortgage lending acts. He wrote:
Reactions to the Three Reports
Yves Smith was one chronicleer of the financial crisis who was outspoken regarding the political basis on which the commissioners were appointed. She published a detailed analysis of criminal activities presented in testimony and data to the commission that were not properly delineated in the final report (or the dissents). She obtained information from non-partisan staff working for the commission who expressed to her their opinion that, because of the political appointments, the FCIC was Set Up to Fail. A more complete post is Insiders: FCIC Was Set Up to Fail. Two other insightful pieces by Yves are
Bank fraud expert William K. Black was another critic. He was especially outraged by the Peter Wallison report. Prof. Black discussed why Wallison's position was in direct conflict with financial system and, most importantly, mortgage default data. See these posts:
Below are two quotes from Angelides. The first refers to the tens of billions of dollars that the mega banks have paid in settlement of charges of wrong doing against them. The second refers to the practice of banks to package mortgages into securities, selling them and then buying derivatives that would pay off if the mortgages went bad.
Philip Angelides Letter
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