2008 financial crisis was an “avoidable” disaster

“caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a US inquiry….” reports the SMH.

This report makes me wonder: What lessons WILL capital learn from the crisis? How will they propose to reduce the risk of the next crisis? Will it be that the financial sector should be more closely regulated? If so, in what way? And – what will be the consequences, for capital and for labour of their ‘anti-crisis’ measures?

More about the report…

“But the panel was itself divided along partisan lines – there is a majority report and two minority reports – which could blunt the impact of its findings. The panel’s findings will be released today.

The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.

The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben Bernanke, who did not foresee the crisis but played a crucial role in the response.

It criticises Mr Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” in his era as a “prime example” of negligence.

It also criticises the Bush administration’s “inconsistent response” to the crisis – allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank, Bear Stearns – as having “added to the uncertainty and panic in the financial markets”.

The report could reignite debate over the influence of Wall Street; it says regulators “lacked the political will” to scrutinise and hold accountable the institutions they were supposed to oversee.

The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in contributions to the campaigns of political parties.”

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