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INTRODUCTION

Why a Dissent?

Th e question I have been most frequently asked about the Financial Crisis
Inquiry Commission (the “FCIC” or the “Commission”) is why Congress bothered
to authorize it at all. Without waiting for the Commission’s insights into the causes
of the fi nancial crisis, Congress passed and the President signed the Dodd-Frank
Act (DFA), far reaching and highly consequential regulatory legislation. Congress
and the President acted without seeking to understand the true causes of the
wrenching events of 2008, perhaps following the precept of the President’s chief of
staff —“Never let a good crisis go to waste.” Although the FCIC’s work was not the
full investigation to which the American people were entitled, it has served a useful
purpose by focusing attention again on the fi nancial crisis and whether—with some
distance from it—we can draw a more accurate assessment than the media did with
what is oft en called the “fi rst draft of history.”
To avoid the next fi nancial crisis, we must understand what caused the one
from which we are now slowly emerging, and take action to avoid the same mistakes
in the future. If there is doubt that these lessons are important, consider the ongoing
eff orts to amend the Community Reinvestment Act of 1977 (CRA). Late in the last
session of the 111 Congress, a group of Democratic congressmembers introduced
th
HR 6334. Th is bill, which was lauded by House Financial Services Committee
Chairman Barney Frank as his “top priority” in the lame duck session of that
Congress, would have extended the CRA to all “U.S. nonbank fi nancial companies,”
and thus would apply, to even more of the national economy, the same government
social policy mandates responsible for the mortgage meltdown and the fi nancial
crisis. Fortunately, the bill was not acted upon. Because of the recent election, it is
unlikely that supporters of H.R. 6334 will have the power to adopt similar legislation
in the next Congress, but in the future other lawmakers with views similar to Barney
Frank’s may seek to mandate similar requirements. At that time, the only real
bulwark against the government’s use of private entities for social policy purposes
will be a full understanding of how these policies were connected to the fi nancial
crisis of 2008.
Like Congress and the Administration, the Commission’s majority erred
in assuming that it knew the causes of the fi nancial crisis. Instead of pursuing a
thorough study, the Commission’s majority used its extensive statutory investigative
authority to seek only the facts that supported its initial assumptions—that the
crisis was caused by “deregulation” or lax regulation, greed and recklessness on
Wall Street, predatory lending in the mortgage market, unregulated derivatives
and a fi nancial system addicted to excessive risk-taking. Th e Commission did not
seriously investigate any other cause, and did not eff ectively connect the factors

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