The 2008 financial meltdown was avoidable and largely caused by unnecessary risk-taking, corporate mismanagement and inept regulation, according to the US government's official report.
The financial crisis inquiry commission's official report is due tomorrow but according to leaks in the New York Times it will conclude: "The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again."
Regulators "lacked the political will" to oversee and hold accountable the institutions they were supposed to oversee, the report says. Politicians let the regulations slide. Finance chiefs were guilty of questionable practices and incompetence.
The panel has reportedly concluded that several financial industry figures may have broken the law in the run-up to the crisis. Several potential legal cases may now be passed to state or federal authorities for further investigation and potential prosecution.
In the three years since the meltdown there have been few prosecutions.
"The crisis was the result of human action and inaction, not of Mother Nature or computer models gone awry," the report states. "The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Their's was a big miss, not a stumble."
Both the Democrats and the Republicans are criticised. The report concludes that the decision not to regulate some forms of financial derivatives under Bill Clinton was "a key turning point in the march toward the financial crisis". The Republican response to the financial crisis was "inconsistent" in letting Lehman Brothers go bankrupt while bailing out other banks and institutions.
The report is also critical of both former Federal Reserve chairman Alan Greenspan and his successor Ben Bernanke. Greenspan led the Fed during the housing boom. His championing of financial deregulation was a "pivotal failure to stem the flow of toxic mortgages" and a "prime example" of government negligence.
Timothy Geithner, US Treasury secretary, also comes under fire. Geithner was president of the Federal Reserve Bank of New York during the crisis. He should have clamped down on excesses at Citigroup and failed to understand the depth of Lehman's problems until it was too late, says the report.
The major financial players in the collapse also come in for unsparing criticism. Citigroup executives paid little attention to the risks associated with mortgage securities, according to the report. Executives at American Insurance Group, the largest recepient of taxpayer bailout funds, were blind to the risks inherent in the $79 bn exposure the insurer had in credit default saps. The collapse of these complex insurance products backed by risky home loans caused a financial crisis across the globe. Top managers at Merrill Lynch are among other executives singled out for criticism for their apparent inability to recognise the gravity of their situation.
The report is critical of some early theories about the financial crisis. It concludes that low interest rates brought about by the Fed after the 2001 recession did increase risk taking but were not a primary cause of the meltdown.
The full report is expected to be released as a 576-page book on Thursday and was meant to be the definitive report on the financial crisis. Alongside the report the commission will release a trove of transcripts and other raw material online. The report was based on 19 days of hearings and interviews with more than 700 witnesses.
But compiling the report's conclusions has proved contentious .
Only six of the 10 commission members have backed the final report, all of them Democrats. Three Republican commission members have prepared a dissenting report that is more critical of government and less critical of corporations. A fourth Republican commission member, Peter Wallison, a former White House counsel to Ronald Reagan, has written his own dissenting report, that is expected to lay the blame at the feet of Fannie Mae and Freddie Mac, the government-backed mortgage finance giants.