Government and the private sector caused the 2008 financial crisis, according to a blue-ribbon panel's draft report that cited toxic mortgages as one of the main culprits.
Quoting the Financial Crisis Inquiry Commission's draft report, the Wall Street Journal says "dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis." The report also points to "stunning instances of governance breakdowns and irresponsibility."
The Journal adds the report cites flourishing mortgage fraud around the United States in the years running up to the meltdown. The report also notes that major financial institutions packaged loans into securities that they had reason to suspect didn't meet their standards. It also cited the proliferation of exotic securities such as derivatives and the rise of a lightly regulated shadow banking system.
"Alarm bells were clanging inside financial institutions, regulatory offices, consumer service organisations, state law enforcement agencies, and corporations throughout America, as well as in neighborhoods across the country," says the draft.
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