Financial Crisis Inquiry Commission Chairman Phil Angelides has announced that the commission’s report will be released next Thursday, January 27th.
I voted against the majority report and filed a dissenting view along with Vice Chairman Thomas and Commissioner Doug Holtz-Eakin. I’ll let others speak for themselves about their votes and actions.
About a month ago, four of us on the commission filed a preliminary paper. For me, the upcoming three-man dissent, of which I am an author, will supersede that document. At the time I thought it was necessary to sign onto a document that would have met the statutory reporting deadline required of the commission had we been able to muster six votes. My views are more fully and more accurately represented in the 27-page dissent you will see next week.
For now I’m not going to discuss the substance of the issue, but I will point you to a good paper that may help you prepare for next week’s release.
In November 2009, Douglas Elliott and Martin Baily of the Brookings Institution wrote “Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble.”
Elliott and Baily describe three narratives of the crisis:
Narrative 1: It was the fault of the government, which encouraged a massive housing bubble and mishandled the ensuing crisis.
Narrative 2: It was Wall Street’s fault, stemming from greed, arrogance, stupidity, and misaligned incentives, especially in compensation structures.
Narrative 3: “Everyone” was at fault: Wall Street, the government, and our wider society. People in all types of institutions and as individuals became blasé about risk-taking and leverage, creating a bubble across a wide range of investments and countries.
This is a good way to think about different approaches to explaining what caused the crisis.
Expect more from me on this topic next week, including our dissent.