All this month Congress has been holding hearings supposedly looking into the causes of the financial crisis. As Heritage fellow Brian Walsh explains, the hearings have been less about identifying causes, and more about finding villians:
As in past economic crises, some criminal conduct associated with the subprime market has already been unearthed. More is likely to surface as investigations proceed. But to date there is precious little evidence that criminal conduct actually caused the meltdown. As in previous market-wide crises, including the savings-and-loan crisis of the 1980s and 1990s, even the preliminary conclusions suggest that any criminal activity was incidental to, rather than the cause of, the crisis.
This of course has not kept Congress from claiming that the problem was caused by criminal conduct. In the past few weeks, for example, members of Congress from both sides of the aisle have leveled the following charges:
- “Literally thousands and thousands of people ended up with mortgages vastly more expensive than ones they qualified for. That is criminal in my view,” said Senator Chris Dodd (D-CT).
- “Are the people that have caused this, is somebody going to go to jail?” said Representative Bill Sali (R-ID).
- “We have got to set an example by bringing the full might of federal law enforcement against the people who illegally profited or destroyed companies at the expense of our country.” Reps. Mark Kirk (R-IL) and Chris Carney (D-PA).
Perhaps the most revealing comment of all came from Representative John Mica (R-FL) who–before the hearings were even completed–informed Lehman Brothers CEO Richard Fuld that “if you haven’t discovered your role, you’re the villain.” Mica’s comments, in addition to the other above-cited quotations, reveal that, for the most part, legislators are not conducting these hearings in order to uncover facts. Instead, Congress is more concerned about convincing the public these CEOs are Gordon Gecko-style villains, while simultaneously shifting blame away from the Hill.
The Heritage Foundation is currently hosting a panel discussion on these events titled, “Avoiding a Rush to Judgment: Overcriminalization and the Subprime Meltdown.” Watch live!