Financial Crisis Inquiry Commission: How a Best-Seller Could Change the Zeitgiest

Last Updated Feb 16, 2011 5:07 PM EST

With the Financial Crisis Inquiry Commission wrapping up its work inquiring into the causes of the financial crisis, I hereby call on Congress to immediately form a commission to inquire into the causes of the crisis within the Financial Crisis Inquiry Commission. History demands it!

Members of the panel were on Capitol Hill this morning to discuss their recently released reports assessing the meltdown -- all three of them. House Republicans at the hearing questioned Democratic commissioners' objectivity. House Democrats questioned Republican commissioners' objectivity. And commissioners questioned each other's objectivity. Said FCIC co-chairman Bill Thomas in his prepared testimony:

From the beginning, I thought that the Commission was created for political purposes, with a partisan structure and a partisan 22-point agenda. It called for six of us to be appointed by Democrats and four by Republicans, and only six votes were needed to transmit the report to the President and the Congress â€"- the math was simple.
The fights to come
In some ways that structure has served Congress -- particularly Republicans -- well. Because if lawmakers can't agree on what caused our financial system to crash, then they don't have to fix it. After all, that would mean showing legislative courage, political independence and a willingness to piss off powerful constituents. Who needs it?

The problem is that the FCIC was less about the last economic crisis than the next one. Whatever the merits of the Dodd-Frank financial reform law, even its defenders acknowledge that it doesn't solve fundamental problems with the financial system.

Optimists also like to describe the measure as only the first step in this process. But it could easily be the last for many years to come, as Washington digs in for trench warfare. Meanwhile, regulators are still developing the rules to implement the law. The financial industry is pushing back. It remains to be seen whether "reform" stays reformed.

The split within the FCIC also allows lawmakers to cherry-pick those commissioners' conclusions that serve their agenda. For instance, some Republicans used today's session to advance their campaign against Fannie Mae (FNMA), Freddie Mac (FMCC) and the idea of government keeping a hand in the housing market. The commission was supposed to produce insights to guide public policy; instead, it produced competing narratives more likely to obstruct it.

A page-turner
The FCIC was good for one thing -- it produced a pretty good book. For all the ideological posturing, the commission did a fine job of identifying many of the factors involved in the crisis and explaining how they connect. It also produced a hit book. The Democratic panelists' final report is now No. 10 on the New York Times best-sellers list.

That many not only be an interesting publishing footnote. The FCIC deserves some credit for helping to change the zeitgeist. Because of its work, we know a lot more about the crisis than before the group got started in 2009. And certainly it's heartening to think that many people are taking the time to delve into a long, technical -- if astonishing -- analysis of what has happened to us. And what could happen again.

After all, the FCIC's mission was never to repair the financial system. That's our job.

Thumbnail from Flickr user WindryWinters

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    Alain Sherter covers business and economic affairs for