WASHINGTON — After more than 18 months of research and investigation, the release of the Financial Crisis Inquiry Commission's final report — heralded as the definitive look back at the 2008 turmoil — proved anticlimactic.
The 662-page report was meant to give bipartisan wisdom on the triggers before and the response to the crisis. But upon its official release Thursday, observers questioned its utility, saying it suffered from a lack of consensus among commissioners, a poor narrative of the crisis and very bad timing.
"It doesn't matter anymore because the … Dodd-Frank Act has been passed and we are already moving on to the details of the regulation that come out from that," said William Longbrake, an executive-in-residence at the University of Maryland.
The commission was formed by Congress in 2009 and modeled in part after the panel created to investigate the Sept. 11 terrorist attacks. But while that earlier panel won praise for the bipartisan findings of its members, the FCIC's report provided not one version of the events surrounding the crisis but three.
The majority view of the 10-person commission was led by the panel's chairman, Phil Angelides, a Democrat and former California state treasurer. (The commission was established when the Democrats still held both houses of Congress.) It said chiefly human error led to a wide array of causes to the crisis: Overpriced housing led to an asset bubble, lenders failed to underwrite mortgages adequately and credit rating agencies endorsed securities that later blew up. Also to blame were the investors, the mortgage giants Fannie and Freddie Mac and regulators for failing to identify the risk.
"In our inquiry, we found dramatic breakdown of corporate governance, profound lapses in regulatory oversight, and near fatal flaws in our financial system," the report said. "We also found that a series of choices and actions led us toward a catastrophe for which we were ill prepared."
After the crisis hit, the report concluded, the government may have stoked the panic with its inconsistent approach to faltering institutions. While American International Group Inc. and Bear Stearns Cos. received aid packages, Fannie and Freddie were placed into conservatorship, and Lehman Brothers was left to fail.
But observers said the report was too unfocused in pinpointing causes of the turmoil.
"If you blame everybody then basically you blame nobody," said Cornelius Hurley, the director of the Morin Center for Banking and Financial Law at Boston University. "There is a lot of blame to go around but there has got to be some prioritization of that and some things were more serious than others."
What is more, the commission was clearly divided along political lines. Four members, all Republicans, of the 10-person commission dissented from the majority view. In the report, three members — co-chairman and former Republican congressman Bill Thomas; Keith Hennessey, a former economic adviser to the second President Bush; and former McCain campaign adviser Douglas Holtz-Eakin — criticized the majority's view, saying it should have been more focused.
"While some of these factors were essential contributors to the crisis, each is insufficient as a standalone explanation," they said in the report.
Meanwhile, commissioner Peter Wallison, a fellow at the American Enterprise Institute, included his own dissenting opinion. He lay blame largely at the doorstep of the Bush and Clinton administrations for policies that, he said, led to unsustainable homeownership.
In an interview, Wallison said the commission's Democratic majority failed to consider all views. "If it had been a thorough and complete investigation there might have been a chance for us all to agree but as I said in the dissent we never really even had an opportunity at the beginning of the process to sit down and talk about what we thought caused the financial crisis and thus to direct the activities of the staff," he said. "The staff went off and did what the chairman directed them to do."
While aspects of the report may have served policymakers considering reforms to prevent a future crisis, the release came more than six months after Congress enacted the Dodd-Frank Act, an overhaul of financial regulation.
Observers said the commission may have missed its opportunity to help mold debate over reforms and their implementation.
"Dodd-Frank implementation rests on the language of the legislation and the political pressure on the Hill," said Jaret Seiberg, a financial services policy analyst at MF Global's Washington Research Group. "This report isn't likely to impact anything else regulators do."
To be sure, some said regulators writing new rules and lawmakers considering revisions to the law may find parts of the report useful.
"There may be things in Dodd-Frank that may limit regulators' ability to deal with financial problems or may lay the seeds for financial problems," said Oliver Ireland, a partner at Morrison & Foerster. "It's not terribly clear what those are now. But in the future people will have time to digest this report and make tweaks going forward."
But many agreed it would have helped if the commission had spoken with a unified voice.
In a statement, Rep. Patrick McHenry, R-N.C., said: "The fact that three differing opinions have emerged from a body of only ten commissioners brings into question the objectivity of the majority report."
Critics said the array of dissenting opinions undercut the report's effectiveness.
"It may have been an unrealistic expectation that the one thing the report might have been capable of doing is to provide a narrative, a basic perspective on the crisis that the commission could have agreed on, and that because they agreed on it, maybe there could be greater consensus in the American polity on it, because there are probably at least a half dozen narratives about what went wrong," said Larry White, a professor at New York University.
"The report didn't deliver a consensus, it delivered three different views. The one useful thing the report might have done didn't happen. Given the personalities involved maybe it was unrealistic to have the goal of a common narrative to begin with but it failed. It failed badly.”