'It's going to happen again' - Financial meltdown committee head
The man who headed up the US government's investigation into the causes of the 2008 financial crisis says that we haven't learned our lesson and that conditions are ripe for another crisis to hit financial markets.
Reuters columnist David Cay Johnston:
The U.S. politician-businessman that Congress put in charge of determining the reasons for the 2008 financial crisis has a sobering message for us: "It's going to happen again."
Phil Angelides, the real estate developer and former California state treasurer who chaired the Financial Crisis Inquiry Commission, said on Friday that "all across the marketplace the warning signs were there" of a coming disaster but the mechanisms and political will to stop it were not.
Angelides warned of a recurring economic nightmare unless Congress and the next president start paying attention to the facts and stop listening to the people who caused, profited from or failed to detect the crisis.
While Wall Street and laissez faire Republicans have attacked the commission's final report - all 22 footnoted chapters of it - Angelides boasted that not one fact had been proven wrong.
Statements from the leading Republican presidential candidates, as well as the tepid actions of President Barack Obama, show an active interest not in fixing the problems, but rather in enabling Wall Street to go on doing business pretty much as it chooses.
What's worse, we still have banks and other businesses that are "too big to fail" and that credit default swaps that caused a $100 trillion meltdown in 2008 are still unregulated, with no transparency so that customers have no idea really how risky they are.
The commission's report shows that a number of people did see what was coming but they were squelched or ignored. Clear back in 1998, four months before the Long-Term Capital Management collapse, Brooksley Born, then chairwoman of the Commodity Futures Trading Commission, wrote a paper predicting that disaster would flow from the unregulated sale of derivatives. Congress responded by making sure derivatives were not regulated.
Then there were the internal reports at failed mortgage banker Countrywide Financial, which warned there was little-to-no hope that many borrowers would ever repay. Freddie Mac and Fannie Mae tried to resist these shaky mortgages, but they had to keep taking them after Countrywide founder Angelo Mozilo applied political pressure.
Fannie and Freddie are now wholly owned by the federal government which means they are even more at risk of being subjected to political pressure.
I don't know what's more unbelievable; that we are headed for another crisis or that Congress and the president are unwilling to address it.