A minority report by three Republican members cite 10 causes for the 2007-2008 financial crisis that led the country into a recession, including placing some of the blame on risky lending and bad state oversight that sparked a housing bubble.
The report comes on the heels of recent media leaks of a report to be released Thursday by a 10-member, appointed Financial Crisis Inquiry Commission, mostly made up of Democratic congressional members. (For more on that report, read U.S. Panel: Financial Crisis Was Avoidable.)
Among the 10 causes the Republicans cite in their minority report, they say the housing bubble is one big factor leading to the financial crisis. They say the housing bubble was caused by population growth in sand states, such as Florida, Arizona, Nevada, and California.
The report blames subprime lending with deceptive lending practices for making the housing bubble even worse. The report blames poor state-level oversight and weak disclosure standards and underwriting rules [that] made it easy for irresponsible lenders to issue mortgages that would probably never be repaid, the report read.
The GOP report also noted that all these factors were supplemented by government policies ... that subsidized homeownership but created hidden costs to taxpayers and the economy. Elected officials of both parties pushed housing subsidies too far.
The report also criticized Fannie Mae and Freddie Mac, the government-sponsored enterprises, for undermining the securitization process. Fannie Mae and Freddie Mac did not by themselves cause the crisis, but they contributed significantly in a number of ways, the report reads.
Source: GOP Report Cites 10 Causes for U.S. Financial Crisis, Reuters Nows (Jan. 26, 2011)