Goldman Sachs fueled the subprime mortgage bubble and bust. Merrill Lynch didn't tell the public about the true state of its financial condition. Fannie Mae and Freddie Mac borrowed far too much money.
And regulators from the Federal Reserve to the Securities and Exchange Commission and other agencies failed to stop these worrisome practices-and made debatable decisions even after the financial system began to collapse.
These are among the findings of the U.S. government's official report on what caused the financial crisis, a series of shocks that culminated in the stock market fall of 2008 and a widespread recession.
The Financial Crisis Inquiry Commission, a congressionally-appointed panel that has spent the past year-and-a-half investigation the causes of the financial crisis, released its a findings Thursday in the form of a more-than 600-page paperback book.
The commission said it referred potential violations of law to the Justice Department or state attorney generals.
The financial crisis was "avoidable," according to the report, which assigns blame to both Wall Street and to regulators in Washington. It says regulators had "warning signs" but ignored or discounted them.
"Some on Wall Street and in Washington with a stake in the status quo may be tempted to wipe away from memory the events of the crisis, or to suggest that no one could have foreseen or prevented them," the report says.
"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 panel places considerable blame on the Federal Reserve for failing to use its regulatory powers to stop major banks from trading in dangerous mortgage-backed investments. 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 Federal Reserve was the one entity empowered to do so and it did not," the report says.