The last time the Government Accountability Office (GAO) assumed a high profile in the news media was last December, when it reported on a list of potential abuses by financial institutions of the terms attached to then Treasury Secretary Henry Paulson's $700 billion bailout plan. Since then the GAO has been broadening its sights from terms of agreement to the broader responsibility of regulation. Their report to the Senate yesterday was not a pleasant one. Here is the lead from Kim Dixon's report for Reuters:
The U.S. government's hodgepodge of financial regulatory agencies failed to take a big-picture view of risk and ignored red flags in the current economic crisis, a government report said on Wednesday.
"Regulators did not effectively address the weaknesses or in some cases fully appreciate their magnitude, until the institutions were stressed," Orice Williams, director of financial markets and community development at the Government Accountability Office, told a Senate panel.
Several of these regulators also appeared before the panel and received a scathing welcome from the ranking Republican Senator, Jim Bunning of Kentucky:
Welcome back from the vacations you've been taking for the past five years. The regulators should have stopped the risk takers taking undue risk with taxpayers' money or with equity that has been invested.
I am glad to see that Bunning has now awakened to smell the coffee. Will he now inquire into how that coffee got brewed in the first place? Will he look into the extent to which those regulators were constrained by the Bush Administration? Will he examine one of my favorite hypotheses from last year, that the Bush Administration "turned laissez-faire policy into 'a failure to govern at all?'" Will he acknowledge the consensual role that Republican legislators took in this fundamental undermining of our Government's tasks and operations? Welcome to the real world that the Bush Administration tried to hide behind their veils of faith-based words of comfort, Senator Bunning! In the immortal words of Boss Tweed, "What’re ya’ gonna do about it?"