Yes, history repeats itself, especially when it is made by the same person, for the same reason, and with the same vehicle. Unlike the 9/11 Commission, which was praised for its bipartisanship, House Speaker
proposed commission to review the Jan. 6 attack on the Capitol will mirror the unbalanced Financial Crisis Inquiry Commission she set up after the 2008 financial crisis, and will be a failure for the same reasons.
In the election following the financial crisis, the Democrats won overwhelming control of Congress and the White House. President Obama’s chief of staff,
said that “you never let a serious crisis go to waste,” and many on the left realized this was an opportunity to increase regulation and government control of the financial system. There was at least one other plausible cause for the crisis: government housing policies, pursued by the government-backed corporations
and strongly supported by congressional Democrats. By 2008 these trillion-dollar institutions were bankrupt and had fostered the creation of a massive housing bubble consisting of at least 31 million subprime and other risky mortgages worth $5.3 trillion. It seemed reasonable to suppose that when the bubble collapsed, the failure of these mortgages had brought the whole financial system down.
Yet if the speaker’s study had concluded that the financial crisis was caused, even in part, by those subprime mortgages, that would have weakened support for more regulation of the financial system. So the commission was set up with six Democrats and four Republicans. That would assure that the commission would place the blame for the financial crisis on insufficient regulation and not interfere with the enactment of legislation—later called the Dodd-Frank Act of 2010—that the speaker and other Democratic lawmakers had in mind.
I was a member of the commission, one of the four Republicans, and have often been asked why its report didn’t discuss in any detail the other possible causes of the crisis, particularly the role of Fannie Mae and Freddie Mac and their reckless mortgage policies. It was because the commission was unbalanced, set up not to conduct an honest inquiry but to make the case for more regulation.
In the initial meetings, it was clear that was a foregone conclusion. The role of government housing policy, or Fannie Mae and Freddie Mac, wouldn’t be, and wasn’t, seriously considered. That Fannie and Freddie are still alive and dominating the housing markets is ample testimony to the success of the Democratic strategy.
The commission’s chairman, a Democratic former California treasurer, ran the show, appointed virtually all the staff, and told us what subjects we would study and what our public and private hearings would be about. There were few if any votes. The executive director he appointed was a senior staff member at the Federal Reserve, one of the agencies responsible for regulating the financial institutions that had gotten into financial trouble.
The staff carried out more than 700 interviews, but commissioners were never told when and where they were to be held or who would be interviewed about what. We seldom learned what had been said. From what we saw in the few interview summaries we got, witnesses were never put under oath, their knowledge of the matters on which they testified was never questioned, and no members of the staff were charged with any form of cross-examination to establish their veracity. Yet many statements by these witnesses appeared in the commission’s final report in support of its findings, without the context in which they were made.
Democrats and their supporters in the press have insisted that the reasons for the attack on the Capitol are clear and that there is no need for balance in studying it. These arguments echo what we heard before the Financial Crisis Inquiry Commission was formed, and it performed exactly as skeptics expected. The Dodd-Frank Act has never had significant support of Republicans, primarily because they correctly believed that the FCIC failed to produce a fair or credible report.
There are no doubt many disagreements between Democrats and Republicans about the events of Jan. 6, but the purpose of studying such events is to find the facts and put them before the American people—the ultimate decision-makers about political matters. If Americans can’t agree that the commission is fair—that it is pursuing truth rather than political advantage—its report, like the Financial Crisis Inquiry Commission’s, will be worse than worthless.
Mr. Wallison is a senior fellow emeritus at the American Enterprise Institute and author of “Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis, and Why It Could Happen Again.”
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8