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CONCLUSIONS OF THE FINANCIAL CRISIS INQUIRY COMMISSION xxiii

hubris would be simplistic. It was the failure to account for human weakness that is
relevant to this crisis.
Second, we clearly believe the crisis was a result of human mistakes, misjudg-
ments, and misdeeds that resulted in systemic failures for which our nation has paid
dearly. As you read this report, you will see that specific firms and individuals acted
irresponsibly. Yet a crisis of this magnitude cannot be the work of a few bad actors,
and such was not the case here. At the same time, the breadth of this crisis does not
mean that “everyone is at fault”; many firms and individuals did not participate in the
excesses that spawned disaster.
We do place special responsibility with the public leaders charged with protecting
our financial system, those entrusted to run our regulatory agencies, and the chief ex-
ecutives of companies whose failures drove us to crisis. These individuals sought and
accepted positions of significant responsibility and obligation. Tone at the top does
matter and, in this instance, we were let down. No one said “no.”
But as a nation, we must also accept responsibility for what we permitted to occur.
Collectively, but certainly not unanimously, we acquiesced to or embraced a system,
a set of policies and actions, that gave rise to our present predicament.

* * *
THIS REPORT DESCRIBES THE EVENTS and the system that propelled our nation to-
ward crisis. The complex machinery of our financial markets has many essential
gears—some of which played a critical role as the crisis developed and deepened.
Here we render our conclusions about specific components of the system that we be-
lieve contributed significantly to the financial meltdown.

• We conclude collapsing mortgage-lending standards and the mortgage securi-
tization pipeline lit and spread the flame of contagion and crisis. When housing
prices fell and mortgage borrowers defaulted, the lights began to dim on Wall Street.
This report catalogues the corrosion of mortgage-lending standards and the securiti-
zation pipeline that transported toxic mortgages from neighborhoods across Amer-
ica to investors around the globe.
Many mortgage lenders set the bar so low that lenders simply took eager borrow-
ers’ qualifications on faith, often with a willful disregard for a borrower’s ability to
pay. Nearly one-quarter of all mortgages made in the first half of  were interest-
only loans. During the same year,  of “option ARM” loans originated by Coun-
trywide and Washington Mutual had low- or no-documentation requirements.
These trends were not secret. As irresponsible lending, including predatory and
fraudulent practices, became more prevalent, the Federal Reserve and other regula-
tors and authorities heard warnings from many quarters. Yet the Federal Reserve
neglected its mission “to ensure the safety and soundness of the nation’s banking and
financial system and to protect the credit rights of consumers.” It failed to build the
retaining wall before it was too late. And the Office of the Comptroller of the Cur-
rency and the Office of Thrift Supervision, caught up in turf wars, preempted state
regulators from reining in abuses.