I would describe the book as really two books. The first 40% or so is more of an analysis of developments in economy and finance over the 20 or so years leading up to the crisis of 08, and the last 60% is more of a narrative of the events of the crisis in the last half of 08. The latter portion heavily reminded me of Sorkin's book, Too Big to Fail. It similarly relies heavily on interviews with high level executives, officials and so on. I understand that, if you are trying to write something that you want the general public to read, you would opt for the chronological narrative of the second half of the report. However, having read Sorkin's book, I felt a little frustrated that there was little added insight here, considering the time, resources and investigative power the commission had.
As far as the analysis goes, it is decent enough if not particularly dazzling. There aren't a lot of surprises here if you have followed the issue over the past 2-3 years. There is nothing like the explosive effect of the Pecora report in the 1930's, on which this commission was modeled. I think that is in part due to the much more active media we now have now; compared to the 1930's, so much in here has come out more or less already.
The only real function that the analytical section performs is to package up what has already been disclosed and assert in a general way what weight should be given to what cause(s). Every factor gets mentioned and given some role; the different political appointees on the commission apparently disagree over how much weight should be given which factors. Although there seems to be a good deal of conversation about that disagreement in the blogosphere, having now read the report, it was frankly a little too general to me, and I have more sympathy for the dissenter who said, in effect, "if everything is a cause, nothing is". Although everything does get mentioned, a number of areas go unexplored in detail. For instance, on page 6, the report notes "The time-tested 30-year fixed-rate mortgage, with a 20% down payment,
went out of style." But they never really explore why (fixed rate loans went out of style due to interest rate volatility in the late 1970s and early 1980s, and the down payment threshold was lowered for two reasons, (1) in the 1980s, advocates for expanding home ownership, such as ACORN, targeted that kind of mortgage as too restrictive, associated it with "redlining" and racism, and pushed for a lowering of origination standards to expand home ownership and (2) real estate developers lobbied for obvious reasons for the lowered downpayment).
The analysis section is a blend of organization by topic and by chronological narrative. This makes it relatively easy to read. However, it might have been more in keeping with the purpose of the commission, as I understand it, to have been less concerned with general readability and provide more quantitative analysis on each topic. I would have loved to have seen something more incisive, although it may be the nature of a commission report that throwing everything in is needed to get even 6 of the 10 to agree on the final text. It took decades for the economics profession to come up with a coherent evidenced account of the causes of the Great Depression, by which I mean Milton Friedman's, and perhaps that is just going to be the case here as well.
I felt the report does not display a good understanding of several areas that were particularly relevant. The chapter on Lehman, for example, begins with statements by the commission about valuation that are excruciating to read if you have worked on valuation analysis (valuation is an opinion about what something will bring in a particular context and thus valuations differ based on the context, especially depending on whether the context is one of an orderly market and orderly marketing into it, or if you are assuming a forced sale in a disorderly market). Similarly, they do not understand CDS's well at all. When they repeatedly describe AIG's CDS's as "new fangled" and so on, they demonstrate that superficial understanding. Credit default swaps are simply a means of credit insurance and financial institutions have been writing credit insurance since the Renaissance if not earlier, just with different documentation. That said, the commission does correctly understand the difference here was that AIG's CDS's were not written by a regulated insurer or financial institution that had to reserve capital against the exposure. At the same time, since regulators repeatedly and systematically failed, as the report says, where they did have jurisdiction, it is not clear that the mere fact of CDS regulation would have changed the outcome for AIG.
The report reads as if someone who wanted to be a novelist or journalist but was not very good was given responsibility for the final draft. There are too many passages that read like someone's attempt to spice things up for the sake of spicing them up. E.g. after laying out an analysis by Paul Krugman on the role of foreign capital in fueling the housing bubble, the report adds a one sentence paragraph: "It was an ocean of money". What a useful observation, huh?
In sum, I think the report is a fine generalist-level survey of the factors behind the financial crisis although not a source of much additional insight.
