Leaving Wall Street Out of the Story

I’ve just read the “preport” issued by the Republican gang of four minority on the Financial Crisis Inquiry Commission (FCIC). The preport was a publicity stunt designed to embarrass the Commission, and discredit its report before it is issued.

The effort became laughable when it was revealed that all four Republicans had voted in favor of banning the phrases “Wall Street” and “shadow banking,” and the words “interconnection” and “deregulation” from the panel’s final report, as confirmed by panelist Brooksley E. Born, a credible and not particularly partisan member of the Commission.

Not so, cried Peter Wallison, the leader of the Republican crew, a partisan operative lodged at the American Enterprise Institute, where he routinely rails against regulation and complains about the Fannie Mae and Freddy Mac, the government sponsored institutions that Wallison risibly tries to blame for the housing bubble, thereby exonerating Wall Street, and dismissing the need for greater regulation.

“Only in the fever-swamps of the left,” writes Wallison, “could anyone believe that the Republicans on the FCIC sought to “ban” the words “Wall Street,” “shadow banking,” “interconnection,” and “deregulation” from the Commission’s report.

Perhaps. But note that the banned words DO NOT APPEAR in the Republican preport. Who are you going to believe Wallison or your own lying eyes?

As for the preport itself, it is a remarkably shabby piece of work, clearly patched together to make a political point, not provide an analysis. Its story is simple. Bubbles happen. Everyone was wrong. Government – mostly Fannie and Freddy – played significant role in inflating. Panic ensued when the bubble burst. Government saved the day by rescuing the banks and investment houses. Big deficits and debt resulted. The sole recommendation for reform: cut spending and get deficits under control.

This has elicited some commentary and analysis, but doesn’t deserve it. It’s a pose, not a position. It’s describing a mass murder while leaving out the shooter, the weapons, and the motive. And it will surely be well rewarded by Wall Street and the shadow banking firms it so carefully succors.

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