Wall Street CEOs explain reasons behind recent financial crisis - Spokane, North Idaho News & Weather KHQ.com

Wall Street CEOs explain reasons behind recent financial crisis

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WASHINGTON. - Who's to blame for the big Wall Street meltdown that led to the worst recession in half a century?

The government panel investigating the issue brought the heads of four big banks to Capitol Hill Wednesday to get some answers.

Goldman Sachs, JPMorgan Chase, Morgan Stanley and Bank of America all admit they went overboard investing in risky mortgages, but the banks say there was an appetite for risk.

They maintain investors wanted to buy those loans.

"You never saw losses in these products because home prices were going up. People were making money," said JPMOrgan Chase CEO James Dimon.

"It sounds to me a little bit like selling a car with faulty brakes, and then buying an insurance policy on the buyer of those cars," countered Financial Crisis Inquiry Commission Chairman Phil Angelides.

Economists called it an "industry on steroids".

"Everybody knew the end was coming," says Peter Solomon. "They just didn't know how it was going to come."

The bankers insist they never counted on taxpayers to save them.

One analyst told the financial crisis inquiry commission to prevent another meltdown, the government can't consider any bank too big to fail.

"Capitalism without bankruptcy is like Christianity without Hell. There have to be consequences," warned Kyle Bass.

The commission will hear from hundreds more before issuing their report in December.

The CEOs who testified Wednesday backed more regulation and defended big employee bonuses, saying most employees who got bonuses weren't involved in making risky decisions.

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