On Wednesday, April 13, 2011, the Senate’s Permanent Subcommittee On Investigations issued its Report entitled: "Wall Street and the Financial Crisis: Anatomy of a Financial Crisis."  " The 639-page Report is "the product of a two-year, bipartisan investigation … into the origins of the 2008 financial crisis." The Subcommittee conducted over 150 interviews and depositions, and accumulated and reviewed tens of millions of pages of documents. The Subcommittee concluded that the financial crisis was "the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."

The Subcommittee focused on four interconnected "root causes" of the financial crisis. The Report expands upon four case studies conducted during the investigation regarding these causative factors: (1) high risk mortgage lending by Washington Mutual Bank; (2) regulatory failures by the Office of Thrift Supervision; (3) the use of inflated credit ratings by Moody’s Investor’s Services, Inc. and Standard & Poor’s Financial Services LLC; and (4) the role of investment banks Goldman Sachs and Deutsche Bank.

The Subcommittee also made a series of recommendations focusing on the four causes, including:

• using regulatory authority to ensure that all "qualified residential mortgages" have a low risk of delinquency or default;

• requiring banks with high risk structured finance products to meet conservative loss reserve, liquidity, and capital requirements;

• completing the dismantling of the Office of Thrift Supervision;

• strengthening the "CAMELS" rating system, which evaluates a financial institution’s: (C) capital adequacy, (A) asset quality, (M) management, (E) earnings, (L) liquidity, and (S) sensitivity to market risk;

• having the Financial Stability Oversight Council evaluate high risk lending practices at financial institutions;

• having the SEC rank the Nationally Recognized Statistical Rating Organizations in terms of performance, in particular the accuracy of their ratings;

• allowing the SEC to hold credit rating agencies accountable in civil lawsuits for inflated credit ratings, when a credit rating agency knowingly or recklessly fails to conduct a reasonable investigation of the rated security;

• strengthening disclosure by the credit rating agencies to require comprehensible, consistent, and useful ratings information to investors;

• reducing the government’s reliance on privately issued credit ratings;

• narrowing proprietary trading exceptions for investment banks to activities that serve clients or reduce risk;

• designing stronger conflict of interest prohibitions for investment bankers; and

• reviewing and strengthening regulations to prevent abusive practices by investment banks involved in structured finance products.