The Financial Crisis Inquiry Report¶
Financial Crisis Inquiry Commission. (2011). The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States.
Cited by¶
4 citations across 4 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Normalization of Deviance
- In financial regulation and risk management, capital ratios drifting toward minimums, model-risk exceptions granted and renewed, and covenants relaxed in good periods exhibit it, and pre-crisis underwriting standards drifted by exactly this mechanism.
This sourceConcludes that dramatically and progressively declining mortgage underwriting standards during the good years - which regulators failed to halt - enlarged the housing bubble and bust; an instance of incident-free history eroding the working risk envelope.
- In financial regulation and risk management, capital ratios drifting toward minimums, model-risk exceptions granted and renewed, and covenants relaxed in good periods exhibit it, and pre-crisis underwriting standards drifted by exactly this mechanism.
- Regulatory Capture
- Regulators draft rules that exempt too-big-to-fail banks from strict capital requirements or allow proprietary trading that smaller competitors cannot match, a dynamic the Financial Crisis Inquiry Commission (2011) documented in detail for the pre-2008 era.
This sourceDocuments revolving-door dynamics, campaign contributions, and rule-shaping by large banks in pre-2008 financial regulation.
- Regulators draft rules that exempt too-big-to-fail banks from strict capital requirements or allow proprietary trading that smaller competitors cannot match, a dynamic the Financial Crisis Inquiry Commission (2011) documented in detail for the pre-2008 era.
- Trusted Intermediary Compromise
- Hardware. Counterfeit components entering a trusted procurement channel and reaching consumers who trusted the supplier rather than testing each lot. Information and finance. Rumour laundering, where a planted story is escalated through outlets of rising credibility until consumers inherit the falsification from a trusted source; and the rating channel, where investors relied on agency ratings rather than re-examining underlying loans.
This sourceFinds investors relied on credit-rating agencies — 'often blindly' — rather than re-examining the underlying loans; ratings were 'key enablers' whose channel propagated to all holders.
- Hardware. Counterfeit components entering a trusted procurement channel and reaching consumers who trusted the supplier rather than testing each lot. Information and finance. Rumour laundering, where a planted story is escalated through outlets of rising credibility until consumers inherit the falsification from a trusted source; and the rating channel, where investors relied on agency ratings rather than re-examining underlying loans.
Domain-specific¶
- Black Elephant
- Climate policy — the archetypal case: settled physics since the 1980s and the 1990 IPCC assessment, three decades of deferral because prevention's cost lands on present actors and the benefit disperses across future ones. Infrastructure — aging grids, levees, and water mains warned about for years then deferred through budget cycles until a Surfside-style collapse or Flint-style water crisis. Pension and entitlement shortfalls — decades-known demographic funding gaps that political systems defer because no actor will absorb the political cost of closing them. Antimicrobial resistance — a textbook decades-warned hazard with a known-broken antibiotic market, expected long-run cost persistently underweighted. Financial-system fragility — the 2006–07 housing and derivative exposures widely known to participants and regulators
Supported in partVerified against the work's full text
“have been recognized by market [participants], policy makers, and [regulators]. However, it is the Commission's”
- Climate policy — the archetypal case: settled physics since the 1980s and the 1990 IPCC assessment, three decades of deferral because prevention's cost lands on present actors and the benefit disperses across future ones. Infrastructure — aging grids, levees, and water mains warned about for years then deferred through budget cycles until a Surfside-style collapse or Flint-style water crisis. Pension and entitlement shortfalls — decades-known demographic funding gaps that political systems defer because no actor will absorb the political cost of closing them. Antimicrobial resistance — a textbook decades-warned hazard with a known-broken antibiotic market, expected long-run cost persistently underweighted. Financial-system fragility — the 2006–07 housing and derivative exposures widely known to participants and regulators
Verification¶
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