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Democrats allege GOP partisanship on financial crisis panel [Updated]

July 13, 2011 |  7:25 am

This post has been corrected. See note at the bottom for details.

A Republican member of the federal commission that investigated the financial crisis was guided more by politics than fact-finding in hopes of derailing the sweeping Dodd-Frank Wall Street reform law, according to a report Wednesday by congressional Democrats on the House Oversight Committee.

Based on a review of more than 400,000 internal documents, the 37-page report said Republican Commissioner Peter Wallison urged his GOP colleagues on the Financial Crisis Inquiry Commission "to use their positions on the commission to help House Republicans in their efforts to repeal the Dodd-Frank Act."

"It's very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank," Wallison wrote in an email to Republican Commissioner Douglas Holtz-Eakin last November.

The email was sent the day after Republicans won control of the House in congressional midterm elections. The next day, Wallison a fellow at the conservative American Enterprise Institute think tank, sent a similar email to Republican Commissioner Bill Thomas, the report said.

The report said Wallison engaged in a campaign to blame the crisis on government housing policy, a position rejected by the other Republican commissioners. The report also said Thomas and his staff shared confidential information about the commission's work with a political consulting firm.

[Updated, 9:30 a.m., July 13: Wallison denied he coordinated his work with House Republicans. He said he shared their opposition to the financial reform law and was concerned that if Republican commissioners didn't put up a united front "we were simply going to weaken the position of Republicans in the House or the Senate who wanted to repeal the Dodd-Frank Act."

Wallison said Democrats on the commission weren't interested in finding out key facts about the role of government housing policy in creating the subprime housing boom.

"The whole thing was very badly run and never objective from the beginning," he said.]

Thomas could not immediately be reached for comment.

The allegations are another blow to the much-maligned Financial Crisis Inquiry Commission, a bipartisan panel headed by former California Treasurer Phil Angelides. Established by Congress to produce a definitive report on the causes of  the 2008 financial crisis, the panel spent 18 months investigating the crisis, holding a series of high-profile hearings.

But when it came time to draw conclusions, the commission split into partisan camps and produced a fractured report -- delivered a month late in January -- that had three different conclusions.

The panel's main findings -- approved only by Democrats -- spread blame for the crisis widely among consumers, regulators and financial executives. Wallison wrote a separate dissent blaming government housing policy, particularly Fannie Mae and Freddie Mac. And the other three Republicans wrote a dissent blaming an unavoidable sequence of global economic forces.

House Republicans originally charged Democrats on the commission with partisanship. House Oversight Committee Chairman Darrell Issa (R-Vista) launched an investigation and requested emails, memos and other internal documents.

The committee had scheduled a hearing for Wednesday, with Angelides set to testify, but it was abruptly canceled on Monday, Angelides told supporters in an email.

Committee Democrats said their investigation found that Issa's allegations of partisanship, conflicts of interest and financial mismanagement by the commission's Democrats "were largely unsubstantiated."

[For the record: 11:30 a.m. July 13: An earlier version of this post said that some Republicans on the commission were guided more by politics than fact-finding in hopes of derailing the Dodd-Frank Wall Street reform law. In fact, the report makes the allegation against only one Republican commissioner.]


Financial crisis panel finds many at fault

Panel produces fractured view of financial crisis

Top Republican decries 'partisan environment' of financial crisis inquiry

Wall Street executives admit mistakes before financial crisis

Financial-crisis commission's challenge: staying bipartisan

 -- Jim Puzzanghera in Washington