RENEE MONTAGNE, Host:
NPR's Chris Arnold reports.
CHRIS ARNOLD: Here's Lloyd Blankfein, the CEO of Goldman Sachs from back then, being questioned by Commission Chairman Phil Angelides.
MONTAGNE: Everything is context driven. Look, how would you look at the risk of a hurricane? The season after we had four hurricanes on the East Coast, which was absolutely extraordinary, versus the year before.
MONTAGNE: Mr. Blankfein, I want to say this: Having sat on the board of the California Earthquake Authority, acts of God we'll exempt. These were acts of men and women.
MONTAGNE: I'm just saying that if you're asking me a question...
MONTAGNE: No. These were controllable, is my only observation.
MONTAGNE: I agree.
ARNOLD: Angelides' point appears to be the conclusion of the overall inquiry.
MONTAGNE: The key finding of the report was that this was not an accidental crisis.
ARNOLD: Mike Calhoun is the president of the nonprofit Center for Responsible Lending.
MONTAGNE: It happened because key players were richly rewarded, played loosely, and made highly leveraged gambles that ultimately devastated our economy. And that included - in particular - Wall Street companies that ordered up risky home loans and then packaged them deceptively and dumped them on investors, often fraudulently.
ARNOLD: But the report isn't just critical of financial firms. Regulators come under some pretty harsh criticism, too, for not intervening as a plague of bad home loans spread throughout the financial system.
MONTAGNE: The report hammers the Federal Reserve. It had the responsibility and authority to set mortgage rules for all types of mortgage lenders.
ARNOLD: William Black agrees. He's a law professor at the University of Missouri, Kansas City. He's also a former regulator, and served on a similar commission that looked into the causes of the savings and loan debacle back in the wake of that crisis. He, too, thinks that the Federal Reserve shares a big part of the blame for ignoring warning signs. He says back in 2004, the FBI warned of an epidemic of mortgage fraud. And even before that, the giant subprime lender Ameriquest was investigated, and found to be making big profits by selling bad home loans to investors. But Black says the Fed did nothing.
P: Think of this as a river of toxic waste. The Fed could have stopped the river at its source, could have dammed it and dried it all up.
ARNOLD: Peter Wallison is on the commission, and wrote his own dissenting report.
MONTAGNE: My view is that this was fundamentally the government's fault. The government was creating demand for these mortgages.
ARNOLD: Chris Arnold, NPR News.