Global meltdown was ‘avoidable’!

Now,after the financial crisis wreaked havoc across the world,US is saying it was avoidable!

The 2008 global financial crisis was an avoidable disaster caused by widespread failures in the US government regulations,corporate mismanagement and heedless risk-taking by Wall Street,according to the conclusions of a federal inquiry.

The commission that investigated the crisis casts a wide net of blame,faulting two administrations,the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending,the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done, the panel wrote in the reports conclusions,which were read by The New York Times. If we accept this notion,it will happen again.

While the panel,the Financial Crisis Inquiry Commission,accuses several financial institutions of greed,ineptitude or both,some of its gravest conclusions concern government failings,with embarrassing implications for both parties. But the panel was itself divided along partisan lines,which could blunt the impact of its findings.

Many of the conclusions have been widely described,but the synthesis of interviews,documents and testimony,along with its government imprimatur,give the report to be released on Thursday as a 576-page book a conclusive sweep and authority.

The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.

Of the 10 commission members,the six appointed by Democrats endorsed the final report. Three Republican members have prepared a dissent focusing on a narrower set of causes; a fourth Republican,Peter J Wallison,has his own dissent,calling policies to promote homeownership the major culprit. The panel was hobbled repeatedly by internal divisions and staff turnover.

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The majority report finds fault with two Fed chairmen: Alan Greenspan,who led the central bank as the housing bubble expanded,and his successor,Ben Bernanke,who did not foresee the crisis but played a crucial role in the response. It criticises Greenspan for advocating deregulation and cites a pivotal failure to stem the flow of toxic mortgages under his leadership as a prime example of negligence.

It also criticises the Bush administrations inconsistent response to the crisis allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank,Bear Stearns,with Fed help as having added to the uncertainty and panic in the financial markets.

Like Bernanke,Bushs Treasury secretary,Henry M Paulson Jr,predicted in 2007 wrongly,it turned out that the subprime collapse would be contained,the report notes. Timothy F Geithner,who was president of the Federal Reserve Bank of New York during the crisis and is now the Treasury secretary,was not unscathed; the report finds that the Fed missed signs of trouble at Citigroup and Lehman,though it did not have the responsibility for overseeing them.

Former and current officials named in the report,as well as financial institutions,declined to comment before the report was released. The report could reignite debate over the influence of Wall Street; it says regulators lacked the political will to scrutinise and hold accountable the institutions they were supposed to oversee. The financial industry spent $2.7 billion on lobbying from 1999 to 2008,while individuals and committees affiliated with it made more than $1 billion in campaign contributions.SEWELL CHAN