Why are we still discussing the causes of the financial crisis?

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Here’s a question that might be worth asking. With both the House and the Senate zeroing in on passing a bill to overhaul the financial industry, why are we still so deeply enmeshed in debating the causes of the financial crisis in the first place?

I ask because as Congress enters what appears to be the final stretch of its financial-overhaul negotiations, the Financial Crisis Inquiry Commission (FCIC)—which Congress created to figure out the causes of the crisis—is just starting to hit its stride. Today was the first of two days dedicated to the role of derivatives. Joseph Cassano, the former head of AIG’s derivatives unit (remember that implosion and government bailout?), testified, as did Goldman Sachs president Gary Cohn. Yet Congress has already decided what to do about derivatives—run them through clearinghouses and limit how much banks are allowed to play around with them.

If we’ve already done the legislating—that is, if we’ve already determined, rightly or wrongly, what needs to be fixed—then why are we still having these sorts of hearings? The FCIC’s report back to Congress isn’t due until December.

Let me first say this: I am a fan of the FCIC’s work, which I’ve been following on TV and in person. It’s easy to dismiss hearings held by a Congressionally mandated commission as a dog and pony show, but anyone who has been paying close attention knows that former California Treasurer Phil Angelides and his fellow commissioners are doing a whole lot of digging, asking and thinking, and not necessarily making friends along the way.

And I do think this is important work. Partly because it helps establish a through, impartial written history of the financial and economic crisis (Those who don’t know history…), and partly because it might just start to chip away at the moral hazard caused by the various government bailouts. If you’re a bigwig financial executive and you step over the line of good behavior, you may get to keep your millions, but you’re still going to have to show up for your public flogging. As Warren Buffett once said (and I paraphrase), you shouldn’t do anything in business that you’d mind appearing on the front page of the newspaper in the morning. This is a visceral reminder of that.

Still, I’ve been finding myself wishing that we’d had a little more time to let the FCIC do its job before we determined, once and for all, how we’re going to rejigger the financial industry.

At least I did until I read this recent blog post by the Eurasia Group’s Dan Alamariu. Right now, the financial reform bill currently in Congress feels like the financial reform bill, but Alamariu writes that there will almost certainly be more to come:

Regulatory reform following a crisis is often a matter of trial and error. New rules are written, and sometimes rewritten. More regulations are introduced as the economic picture changes and as new risks land on the policymakers’ agenda. Congress was still passing new pieces of Depression-era reform as late as 1940.

Alamariu calls the reforms currently on the table “only the opening salvo of a larger reform process that will take years to complete.” He goes on to acknowledge that while Congress may no longer have an 11-year attention span, he nonetheless expects regulatory overhaul to take several years, including a phase of reconciling new U.S. laws and banking standards with new ones abroad.

Alamariu also addresses the FCIC directly, explaining that the commission that it is based on, the Pecora Commission (which was charged with investigating the causes of the Great Depression), provided the rationale for legislation for years afterwards—the Glass Steagall Act of 1932, the Securities Act of 1933, the Securities Exchange Act of 1934.

It might feel like financial reform is coming in for the home stretch, but it may simply be finishing up its first inning.

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