The Financial Crisis Inquiry Commission dissects the fiscal crisis, but what should we do about it?

Wonk: n. an expert, a nerd, someone really knowledgeable. I know a lot of wonks: political wonks, environmental wonks, fiscal wonks. But in the world of wonkdom, very few rival Sacramento native Phil Angelides.

It is not surprising that Angelides was selected to head the official Financial Crisis Inquiry Commission, charged with investigating what the hell led us into the worst fiscal crisis since the Great Depression. To oversee a commission made up of six Democrats and four Republicans is a challenge. To investigate the financial industry, with its enormous political power, is a challenge. And such a serious investigation, which could result in criminal penalties, makes the commission’s task immense. This was a job for a wonk master.

I have read the conclusions of the 500-page informative report, and the commission did a very good job of explaining what happened. Unfortunately, they were not asked to recommend solutions. That’s a pity. But the report paints an ugly picture. Financial institutions, using their massive political power, pushed for deregulation, eliminating virtually all of the necessary safeguards. Government officials had an absurd faith that the market would police itself. And the country’s leading banks operated in an immoral, dishonest manner—but that may not be illegal, because those same institutions helped write the laws.

In talking with Angelides last week, I asked him what he thought we should do now to reform our financial institutions. He probably knows the answer to this question. Unfortunately, he probably also knows this will be difficult to do, given political realities.

I asked Phil if, given the billions of dollars that financial institutions contribute to lobbying and campaign donations, our political leaders would be committing professional suicide if they suggested significant reform. Angelides answered obliquely, saying that when government employees prematurely revealed the extent of the corruption and the imminent danger of the coming housing crisis, they faced extreme action. No one wanted to be the canary in the coalmine.

This is scary. While I do believe the fiscal wonks know how to put our house in order, I am doubtful that the politicians can find a way to agree on it. I had hoped that the wizard of wonkdom could suggest a clear path toward a more sustainable finance system. Given today’s political realities, now I am not so sure.

So I suggest that you read the report. The Financial Crisis Inquiry Report, like Andrew Sorkin’s Too Big to Fail, is a great who-done-it examination of a gigantic fiscal train wreck. The more people who understand how screwed up our fiscal institutions are, the more support we can give the fiscal wonks as they try to reason with the political wonks.