Washington Post Staff Writers

The report released Thursday by the Financial Crisis Inquiry Commission, a congressionally appointed panel that has spent the past 18 months investigating the causes of the worst financial calamity in generations, spares virtually no one in assigning culpability.

Released to the public online and in the form of a 633-page paperback, the report does not contain any major revelation that would fundamentally alter popular perceptions of the crisis. But it weaves together many different strains of information, garnered with subpoena powers that allowed the commission to collect testimony from dozens of insiders and review the internal documents of federal regulators and banks.

This report exposes facts, identifies responsibility, unravels myths and helps us understand how this crisis could have been avoided. It is our best attempt to record history, not to rewrite it, nor allow it to be rewritten, commission chairman Phil Angelides, the former treasurer of California, said at a news conference Thursday morning.

The commission said it referred potential violations of law to the Justice Department or to state attorneys general, but it did not provide more specifics.

The report was approved by Angelides and five other members of the panel appointed by the congressional Democratic leadership. The Republican minority on the panel opposed the report and released two dissents. The political schism has cast doubt on whether the document will stand as the definitive historical account of the crisis.

Regulators

While the report is scathing in its review of Wall Street, what’s notable is how hard it comes down on federal regulators for missing warning signs, fighting turf wars and being shortsighted overall. We conclude the government was ill-prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets, the report says.

The panel places considerable blame on the Federal Reserve for failing to use its powers to stop banks from taking part in massive amounts of high-risk mortgage lending. The Fed committed a pivotal failure to stem the flow of toxic mortgages, which it could have done by setting prudent mortgage-lending standards, the report says. The Federal Reserve was the one entity empowered to do so and it did not.

The report also questions the Fed’s decision not to save Lehman Brothers from collapse in the fall of 2008.

Fed Chairman Ben S. Bernanke has said the Fed did not have the authority to bail out Lehman, because there was no certainty of being paid back. But the report says the law does not require loans to be fully secured, which the Fed’s top lawyer acknowledged in an internal memo.

The report also paints an unflattering picture of other regulators, including the Securities and Exchange Commission and banking overseers, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.

The SEC, which had primary oversight over major investment banks, failed to restrict their risky activities and did not require them to hold adequate capital and liquidity for their activities, contributing to the failure or need for government bailouts of all five of the supervised investment banks during the financial crisis, the report says.