On April 13, after two years of investigation, Senator Carl Levin and Senator Tom Coburn, Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations released a final report on their inquiry into the main causes of the financial crisis.
The report presents new facts, findings and recommendations, with more than 700 new documents totaling over 5,800 pages.
The report focuses on the ways that financial firms deliberately took advantage of their clients and investors, on deeply flawed credit ratings, and on federal regulators who apparently cast a blind eye on these unsafe and unsound practices.
The report expands on evidence collected at four Subcommittee hearings in April 2010, examining four aspects of the crisis through a series of detailed case studies: 1) high-risk mortgage lending, using the case of Washington Mutual Bank; 2) regulatory inaction, focusing on the Office of Thrift Supervision's failed oversight of Washington Mutual; 3) inflated credit ratings, examining the actions of Moody's and Standard & Poor's; and 4) the role played by investment banks, principally Goldman Sachs.
The report offers 19 recommendations, including a call for strong implementation of the new restrictions on proprietary trading and conflict of interest. The report also urges, in addition to the reform effected by the Dodd-Frank Act, that the SEC to use its regulatory authority to rank credit ratings agencies according to the accuracy of their ratings.