The Financial Crisis Inquiry Commission has released its report. There are 3 alternative explanations.
Six commissioners argued that:
… Greedy bankers knowingly manipulated the financial system and politicians in Washington to take advantage of homeowners and mortgage investors alike, intentionally jeopardizing the financial system while enjoying huge personal gains. That's the view of the six majority commissioners.
One commissioner argued that:
… The primary cause was government intervention in the housing market. This intervention, principally through Fannie Mae and Freddie Mac, inflated a housing bubble that triggered the crisis.
Three commissioners (all Republicans) came up with this:
Both of these views are incomplete and misleading. The existence of housing bubbles in a number of large countries, each with vastly different systems of housing finance, severely undercuts the thesis that the housing bubble was a phenomenon driven solely by the U.S. government. Likewise, the multitude of financial-firm failures, spanning varied organizational forms and differing regulatory regimes across the U.S. and Europe, makes it implausible that the crisis was the product of a small coterie of Wall Street bankers and their Washington bedfellows.
Instead, they list 10 smaller causes.
Read the whole thing, entitled “What Caused the Financial Crisis?” in the January 27th issue of The Wall Street Journal.