Questions Remain After Wall Street Collapse Report

Will we ever know what really caused the collapse of Wall Street? Bloomberg News columnist Jonathan Weil

. Weil says that to get to the heart of what went wrong with the Financial Crisis Inquiry Commission's report (released last Wednesday), you need not look any further than page 254, which shows how “the largest investor in a cash fund managed by Bank of America

suddenly pulled out $20 billion of its money in November 2007.” “The withdrawal crippled the fund, which had $40 billion of assets at its peak, forcing Bank of America to step in and prop it up,” Weil said, noting that the commission included a note about the episode in the back of its report. According to Weil, the report says that the identity of the investor has never been publicly disclosed. “The note then referred readers to the source of the information: A couple of stories published in December 2007 by Bloomberg News and the New York Times

,” he said. “And here I had thought the purpose of the commission's inquiry was to uncover new facts that the public didn't already know. Such as: The identity of the mystery investor that single- handedly kneecapped Bank of America's Columbia Strategic Cash Portfolio, once the largest cash fund of its kind in the U.S.” Weil said that the commission had subpoena power and should have been able to get this information. But it didn't. “You can tell the writers knew they were sprinkling MSG on a bunch of recycled material, too, by the way they described their sources,” Weil said, adding that the text and accompanying notes often seem deliberately unclear about whether the commission had dug up its own facts, “or was rehashing information already disclosed in court records, news articles or other congressional inquiries.” Weil said that the bulk of the report covers ground that was largely known, “or at least not all that surprising.” More specifically, Weil said that the conclusions – which claimed the financial crisis was man-made and avoidable; regulators and credit-rating companies blew it; banks and homeowners borrowed too much; companies like American International Group

and Lehman Brothers had horrible governance; etc. – were obvious. “The lack of new insights dovetailed with the commission's non-confrontational approach,” Weil said. “More than 700 people granted interviews, most behind closed doors. Only seldom did the panel issue subpoenas.” Despite his disappointment with the report, Weil believes that it will serve a useful purpose. “For anyone who doesn't know much about the financial crisis, the book is a good, condensed version that's worth reading, even if it doesn't add much to the public's body of knowledge,” he said.