By Peter Schroeder - 02/16/11 05:46 PM EST
Several Republicans blamed government housing policy for driving the creation of bad mortgages that were the foundation of the crisis. Those comments came as an overhaul of the nation's housing finance system has been identified as a top priority for the GOP and Obama administration.
They also offered critiques of the Dodd-Frank financial reform law, as that sweeping legislation is currently being implemented by a slew of federal regulators.
Rep. Ed Royce (R-Calif.) said politicians "muscled the market for zero-down-payment loans," and that actions taken by the Federal Reserve, Fannie Mae and Freddie Mac "turned a boom into a bubble and led to the eventual collapse."
For Democrats, the hearing served as a chance to push for bigger budgets for regulators to handle Dodd-Frank responsibilities, while defending the law itself from attempts to discredit it.
Much of the debate also centered on the partisan breakdown of the commission's findings. The six members of the panel appointed by Democrats approved the official study, while the four Republicans rejected it, issuing two separate dissents instead.
"It's hard to take it seriously when it was conducted on such a partisan basis," said Rep. Jeb Hensarling (R-Texas).
Several Republicans targeted Dodd-Frank in their comments, pointing out that the financial reform law, purportedly intended to address the regulatory failings that allowed the crisis to occur, was signed into law five months before the FCIC issued its report on what caused the crisis.
"It seems only in Congress can we recognize a problem, pass a solution, and then study the problem," said Rep. Steve Stivers (R-Ohio).
Rep. Robert Dold (R-Ill.) warned against "misguided or excessive" government policies.
"We should not be manufacturing legislation or regulatory solutions for problems before we accurately assess the problems," he added.
Former Rep. Bill Thomas (R-Calif.), who served as vice chairman of the FCIC, invited Republicans to cast a scrutinizing eye on Dodd-Frank regulations being drafted.
"Review the regulations ... make sure some of the clear overreaching is really tempered," said the former chairman of the House Ways and Means Committee. "I think this committee is absolutely essential to getting it right."
Democrats swung back, defending regulators and Dodd-Frank.
"My colleagues on the other side of the aisle are claiming that regulations are a job killer," said Rep. Maxine Waters (D-Calif.). "Are we going to have regulatory agencies that turn a blind eye... [or] are we going to have a regulatory system that's going to do a job that it was intended to do?"
The ranking member on the committee, Rep. Barney Frank (D-Mass.), used the hearing as yet another opportunity to bash Republicans for pushing a continuing resolution (CR) that would cut funding for Wall Street regulators.
Under the CR proposed by House Republicans, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) face millions in budget cuts, while the Obama administration proposed major increases in their budgets in its 2012 budget proposal.
Frank said the GOP CR "assaults" the agencies, making it impossible for them to tackle new Dodd-Frank responsibilities, like registering hedge funds.
"As a result of the Republican's budget, neither the SEC nor the CFTC will have the money to do that," he said.
Frank is backing an amendment that would add another $131 million for the SEC in the CR.
The FCIC's official report, released in January, spread broad blame for the financial crisis. It identified government regulators, policymakers and corporate titans as contributing to the crisis, and ultimately concluded that it was avoidable and the result of human error.
However, two dissents were offered by the Republican commissioners. One, approved by three of the conservative members, maintains the financial crisis was a global creation, driven primarily by a credit bubble that emerged in the late 1990s. Peter Wallison, a fellow of financial policy studies at the American Enterprise Institute, issued his own take, targeting affordable housing policy goals as the primary cause of the crisis.