Edited by James R. Barth, Chen Lin and Clas Wihlborg
Chapter 12: The Lost Cause: The Failure of the Financial Crisis Inquiry Commission
Peter J. Wallison 12.1 INTRODUCTION In late January 2011, the US Financial Crisis Inquiry Commission issued its report on the 2008 financial crisis.1 I was one of ten members on this Commission and wrote a dissenting statement that is available online through the American Enterprise Institute (AEI)2 or through the Commission’s website.3 It is also available in hard copy, together with the full report and the other dissents, through the US Government Printing Office.4 Three other Republicans on the Commission – Bill Thomas (who was also the Commission’s vice-chair), Keith Hennessey and Douglas Holtz-Eakin – also dissented, and their dissent (the THH dissent) can also be found on the Commission’s website.5 In this chapter, I summarize my dissent and the logic on which it rested, offer a brief description of the deficiencies of the 500-page majority report, and explain why I could not join in the dissent of the three other Republicans. Since the Commission’s mandate was to explain what caused the financial crisis, my dissent focuses almost entirely on that question. George Santayana is often quoted for the aphorism that ‘those who cannot remember the past are condemned to repeat it’. Attempting to identify the causes of the financial crisis, however, shows that Santayana’s idea was a bit facile. Even if we know what happened in the past, there is still debate about what caused it to happen. The continuing appearance of revisionist histories about important events, such as the USA’s Civil War or the Great Depression, testifies to the...
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