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New York Times Room for Debate


A Nonpartisan Conclusion

January 30, 2011

By Nicole Gelinas

What does the partisan split on that question mean for preventing future economic disasters?

The commission’s conclusion is defensible, and the partisan split is unnecessary.

Since the report came out, the press has focused on the commission’s affixing of “blame.” “Panel Blames All for Meltdown,” was the headline on a Wall Street Journal article. The commission "casts a wide net of blame,” wrote Sewell Chan of The Times.

For their part, three of the four Republican dissenters wrote that they couldn’t abide by the majority “narrative” that “greedy bankers knowingly manipulated the financial system.”

Yet the word “blame” does not appear in the 410-page majority report, except for when the report is citing the opinions of others. Nor does the word “greed” appear in the way that the dissenters imply. The majority only mentions “greed” in saying that it would be simplistic “to pin this crisis on mortal laws like greed." Where the majority report does discuss issues that readers may associate with greed, including bankers’ and traders’ bonuses, it neutrally reports evidence that financial executives thought that out-of-control compensation was, well, out of control. “The dangers of the new pay structures were clear, but senior executives believed they were powerless to change it,” the report says.

It is incorrect, then, for the three dissenters to assert, as they do, that the majority limited its investigation “from the beginning” to “validating the standard narrative about the financial crisis,” including “greed on Wall Street.”

Where the majority commissioners have erred, they’ve erred on the side of being too scrupulously correct -- laying out hundreds of statistics and testimonials in dry, even passive, language.

One can understand why the majority took this tack. Without an explanation of how the insurer AIG was able to use derivatives to take on hundreds of billions of dollars in liabilities without putting cash down to cushion the economy from losses, readers might not have been willing to accept the commissioners’ conclusion that unregulated derivatives helped cause the crisis. Without careful explanations of pre-1980s regulations, one might not grasp how deregulation contributed to the lax borrowing rules that precipitated and magnified the crisis.

To slog through the whole thing requires dedication and a willingness to consult Google to look up some financial terms. But people won’t mind this work. They are still curious about the crisis, and they are right to be. The crisis was “avoidable” in that humans can learn from their mistakes and change. This report is a good – and, yes, nonpartisan -- start at outlining those mistakes.

Original Source:



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