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Yellow tape hangs on a fence during a protest by activists, including the unemployed and those living in foreclosed homes, outside of the New York Stock exchange against Wall Street bonuses on December 15, 2010 in New York City.
The Federal Crisis Inquiry Commission, the official government investigation of the root causes of the financial meltdown that started in 2007, issued its final report this week that spreads the blame around. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire,” the FCIC report states. “To paraphrase Shakespeare, the fault lies not in the stars but in us.” Us, according to the FCIC, also includes homeowners and American consumers for their part in inflating the housing and credit bubbles that eventually burst and dragged down the entire economy with them. While banks over extended themselves and at one point in 2008 12 of the 13 largest financial institutions had been at risk of failure, the report doesn’t spare average Americans who feasted on cheap credit and unrealistic home mortgages. Of course the final report comes six months after Congress passed a financial regulation overhaul bill and as business has largely returned to normal—while the housing market is still slumping, Wall Street firms are profitable and handing out big bonuses and consumers are starting to spend again. Without specific action is the FCIC final report anything more than an academic exercise?
Daniel Indiviglio, associate editor at The Atlantic covering credit markets, regulation, monetary & fiscal policy, taxes, banking & trade