NEW YORK (CNN) – The financial crisis, which wreaked havoc on the economy and sparked a painful recession, could have been avoided, according to a federal commission.
The Financial Crisis Inquiry Commission, in its final report on the causes of the crisis, said today that federal authorities, who failed to curb reckless behaviour on Wall Street, bear much of blame for the turmoil that erupted in 2008 and 2009.
“We conclude first and foremost that this crisis was avoidable,” said Phil Angelides, the commission chairman, at a press conference in Washington.
The crisis was the result of “human action and inaction,” he said, warning that it could be repeated “if we do not learn from history.”
“In many respects, our financial system is unchanged from the eve of this crisis,” he said. “We believe that much more needs to be done.”
In the first official government review of the root causes of the crisis, the commission challenges the notion, expressed by many on Wall Street and in Washington, that the crisis could not have been foreseen.
“There were warning signs,” the report says. “The tragedy is that they were ignored or discounted.”
The crisis was also the product of “dramatic failures of corporate governance and risk management at many systemically important financial institutions,” according to one of the report’s nine conclusions.
The commission faults policies under both Presidents Bush and Obama, as well as actions taken by the Federal Reserve under Alan Greenspan and the current chairman, Ben Bernanke. Tim Geithner, the current Treasury Secretary who was president of the New York Fed during the crisis, and his predecessor, Henry Paulson, were also named in the report.
“As our report shows, key policy makers — the Treasury Department, the Federal Reserve Board, and the Federal Reserve Bank of New York — who were best positioned to watch over our markets were ill prepared for the events of 2007 and 2008,” the commission states.
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