fcic

Robin Harding

The Financial Crisis Inquiry Committee has put up a large swathe of documents including a fair few from inside the Fed. I haven’t spotted any massive stories yet but there’s some interesting reading.

Ben Bernanke asks  Kevin Warsh how much capital Lehman would need to survive by itself, 14th September 2008 Read more

Simone Baribeau

The FT’s live coverage of the Financial Crisis Inquiry Commission’s hearing on the credibility of credit ratings agencies has ended. But read on – a play-by-play of one of the most metaphor-enriched hearings on record is below. Testifying on “credit ratings and the financial crisis” were Warren Buffett, the billionaire investor, and Raymond McDaniel, chairman of Moody’s Corp. All times are eastern standard time.

As it happened coverage below.

2:05 pm: It’s over. After a discussion about rating state and municipal securities (Buffett wit #68 “If the federal government will step in to protect the security, I’d rate it triple A, if not, I don’t know what it should be rated.”) the meeting wraps up. The third hearing will begin at 2:30. No live blog for the next session, alas, but you can watch it hereRead more

Simone Baribeau

Today Alan Greenspan is speaking before the financial crisis inquiry commission about the Federal Reserve’s actions during the housing and mortgage boom which preceded the bust. Mr Greenspan has already spoken widely about his view of the Fed’s role in the crisis before Congress, in media interviews, in a recent academic analysis, and in his memoirs. But now it’s the FCIC’s turn to have a crack at him. They’ve got their work cut out for them if they want to get any fresh information from the former Fed chairman.

Update: They do a pretty good job. Note especially that Mr Greenspan says that Congress’s push toward homeownership affected the Federal Reserve’s decisions.

This is the second set of hearings, called “Subprime lending and securitisation and government-sponsored enterprises”. The hearing will last three days and cover 17 witnesses. Mr Greenspan is the first.

The hearing’s over. But here is the FT’s live blog, written as it happened, on the new (and old) Mr Greenspan had to say about the Fed and the crisis. Read more

Simone Baribeau

Gotta hand it to the Financial Crisis Inquiry Commission – They’ve got their work cut out for them tomorrow, if they want to get any new information at of former Federal Reserve Chairman Alan Greenspan.

Mr Greenspan has written his memoirs, published a 66-page paper on the crisis, and been interviewed by Congress and the media ad naseum.

So what questions could the FCIC possibly ask that would shed more light on Mr Greenspan and his views? We’ve asked the Fed watchers. Here are their responses. Read more

Alan Beattie

The Inquisition Financial Crisis Inquiry Commission, the non-partisan US investigation into what went wrong, is holding an auto-da-fe hearings this week on lessons learned from the crisis. A bit late, frankly, since it is due to report by the end of the year, and the financial regulatory bill is supposed to be done and dusted well before then.

Perhaps instead it can act as a truth and reconciliation commission, or a historical re-enactment society. One of the panel’s victims guests is Chuck Prince, the former Citibank head of “as long as the music’s playing, you’ve got to get up and dance” notoriety, whose bank was eventually rescued by the government for a huge outlay. The historical model for the FCIC is the Pecora Commission, named after the aggressive counsel on the Senate banking committee who tenaciously pursued miscreants and whose investigations led to sweeping federal financial regulation. One of his most notable targets was Charles Mitchell, head of the National City Bank of New York, the speculative behaviour of which was widely blamed for contributing to the stock market crash. And National City Bank later turned into….Citibank. Some things never change.

Krishna Guha

If I heard him right, Jamie Dimon, the head of JP Morgan, just told the Congressional inquiry into the financial crisis that in the pre-crisis years his firm never stress tested what might happen if there was a big fall in house prices. Remarkable.

Dimon is a tough risk manager and JPM came through the crisis in relatively good shape. Heaven knows what the others failed to consider.

Now everyone is stress-testing like crazy. But how long will this private sector discipline last? Read more