Baltimore native Heather Hay Murren, who spent more than a decade on Wall Street, just finished serving on a federal commission charged with investigating the nation's financial crisis.
Murren, who graduated from the Bryn Mawr School and the Johns Hopkins University, was one of 10 commissioners who spent 18 months examining the causes of the meltdown. The work of the commission concluded this month.
In January, the Financial Crisis Inquiry Commission released an extensive report that found nearly everyone, from overextended homeowners to ill-prepared regulators to opportunistic Wall Street executives, had a hand in the meltdown. The report was also released as a 576-page book, which has become a best-seller.
Before being tapped as a commissioner in July 2009, Murren had served as chairman and chief executive of Nevada Cancer Institute since its founding in 2002. Murren remains a board member of the institute.
She began her Wall Street career as an analyst at Salomon Brothers before moving on to J.P. Morgan Securities and Merrill Lynch, where she was a managing director of global securities research and economics.
Murren, 44, who will be in town this week to receive a "distinguished alumna" award from Johns Hopkins, talked recently with The Baltimore Sun about her stint on the commission, what she learned and whether the nation is vulnerable to another financial crisis.
Question: How did you get picked for this job?
Answer: Congress and the Senate looked for people to create a balanced view, and also, in a perfect world, people who have some background in the subject at hand and are independent. I was chosen because of my background in finance. I spent 12 years on Wall Street and am a chartered financial analyst and have served as CEO and chairman of our state's cancer research and treatment center.
My Wall Street experience was far enough in the past that they felt there would be no conflict.
Q: What did the commission conclude about the cause of the financial crisis?
A: The major conclusion of the commission was that the crisis was avoidable, that there were a series of actions and inactions on the part of a variety of people that led to what happened. And when you look at how people have historically evaluated crises, people tend to come at it oftentimes from a one-dimensional standpoint.
What I like about the report is that we pulled everything from economic research to e-mail exchanges within firms to our own analysis.
Q: Was there any finding that shocked or surprised you?
A: There were a few things that I found surprising. Of all the millions of documents that we examined and 19 days of public hearings and 700 interviews, not one person suggested that their own individual behavior related to the crisis. Meaning that a lot of the discussions about the crisis seem as if they wanted to believe that it was an act of God, beyond any human control. And that's not the case here.
The other thing that was amazing to me was just how breathtakingly our underwriting standards changed in the mortgage industry. And again, that really was at least in part the fault of the Federal Reserve, who's in charge of ensuring that mortgages are written prudently, safely and accurately. And they chose not to exercise that authority.
Q: Are we vulnerable to a similar crisis?
A: The business cycle will always ebb and flow, and certainly we will see that continue, but it seems unlikely we will see a crisis of this magnitude in the foreseeable future.
Q: Do we have mechanisms in place now to avoid another crisis?
A: That's the positive part of it. We do, and more importantly, there's increased awareness within our citizenry about risk and accountability. I don't think we'll necessarily have another crisis.
Is it possible? Yes. Is it likely? I don't think so.
A few things have occurred. There's a profound social recognition that leverage, debt and risk are things that should be taken seriously on every level, from households to the boardroom. We have some role to play to ensure that it doesn't occur again.
Some laws have been passed. Ultimately, we need ownership on every level. As regulators, you need to speak out if you see something is not right. If you're working at a business, there's more individual responsibility.
Q: What did you learn personally from serving on the commission?
A: That facts are extremely powerful. And that one of our greatest responsibilities is to make sure that we don't only determine what they are but to include them accurately and completely in dialogue, whether it's a conversation over a dinner table or in the legislative process.
That we allow ourselves and require ourselves to be informed and that we remain civil. It's almost impossible to have a productive dialogue and decision-making process without that.
Q: What kind of feedback are you getting from the public?
