This sounds like the post-9-11 excuse:

Cheney: "I don't think anybody saw it coming"

Why not?

As with 9-11, people raised concerns, but were silenced; and/or the government and national leadership refused to respond or mitigate the risks. The same crew that bungled the pre- and post-9-11 oversight fell down on the economic front.

The US government took a hands off approach to FISA compliance, Geneva enforcement, and economic regulation and risk mitigation.

Worst Case: Subsequent "Minor" Shocks Create Concurrent Financial Crises

Financial fragility is a well-understood risk:

BIS (2002): "Here financial fragility is interpreted as a situation in which very small shocks can tip the economy over the edge into a full blown crisis. In other words, financial fragility is an extreme case of excess sensitivity."

Other sample "financial fragility" analysis

Historical -- See: Financial Fragility and the Great Depression

Country -- See: Google: [ "EBHA Conference 2001" Norway deflation ]

The risk is that a small shock can create a big mess. One problem is Congress would ask that we throw money at this crisis, but not consider whether there are other "small" shocks that could similarly create concurrent crises.

Key Concern

What's to say -- absent a clear understanding of this problem, or what oversight failures exist in Congress and the US government -- that we're not about to suffer subsequent, concurrent second, third, and fourth "minor" shocks, contributing to a deepening financial crises?

It's an open question why this risk review process was not prospectively done within the legislative and executive branches going forward, especially after the 9-11 attacks.

Someone was supposed to be doing risk mitigation and analysis. This is how credit rating agencies get paid. Supposedly someone in government was supposed to be doing the same thing. This is called oversight.

Without these risk assessments, how was Congress adequately reviewing whether the entities under its jurisdiction were or were not meeting requirements? An answer may be on the website archives. It's clear what their jurisdiction has been.

The IMF in 2002 reviewed systemic risk. One question is how a $1.4T industry could, in part, create -- for now -- a multi-trillion dollar requirement for a bailout, with no end in sight. What systemic risks from the 1997 Asian crisis have come home to roost?

Allegations of US Government Malfeasance

The Ford Administration Archives show there was an "Economic Intelligence Board" linked with the National Security Council. Cheney well knew about the importance of monitoring economic conditions. Cheney's name is listed as one of the attendees, and was Ford's Chief of Staff after Rummy became Secretary of Defense.

We saw after 9-11 what government does when it over-reacts: Illegal NSLs, denial of habeas, unlawful FISA, and JTTF illegal surveillance. It remains to be seen how the financial institutions, in an effort to cover up their malfeasance, are over-reacting.  

It's an open question how the corporations -- financial institutions involved with unlawful use of private banking information after 9-11, and the telecoms involved with FISA violations -- could use this financial crisis as a smokesreen.

Failure of Indepent Branch To Conduct Oversight

Congress is still acting as the Administrative branch of the President, and not independently meeting its responsibilities. Congress, as it failed to do after 9-11, needs to review what broke down not just in the Executive branch, but also in Congress.

Congress will rubber stamp illegal bills for the President; and blindly rubber stamp appropriations for war crimes and FISA violations. Why no pre-emptive action on financial risks?  That risk needs to be prospectively managed, especially when there is a known problem of financial fragility.

Congress needs to explain how a supposed "independent" branch could miss the same issues in the Executive Branch, and not independently review and mitigate the risks.  If Congress missed it, what have the credit rating agencies and others done or not done.

It appears the same process Congress took on FISA -- that of taking information from the President, without independently reviewing the issues (not just the provided material) -- occurred in the financial arena. 

It appears Congress, in part, relies on the Executive Branch witnesses to do legislative staff work. That's not independence. When there is a known risk of economic fragility, Congress must oversee whether the risks -- of an "easy, sudden collapse" -- are mitigated. Congress needs to indpendendently answer:

What got in the way of Congress independently creating new mechanisms that would adequately mitigate the chances the US would spiral into a sudden economic crisis?

Was Congress relying on the catalyst of an economic crisis before it could generate a discussion and mitigation plan?

Congress should not focus narrowly on whether the Executive Branch's reports are or are not timely related to a particular option; but what separate methods Congress must independently use to monitor whether the Executive and Congress are or are not adequately looking at a problem or risk area.

Here are some thoughts on what the public needs to Challenge Congress: Where were Members of Congress, and what happened in the "independent" legislative branch?

TPM-Voter Challenge

Part of the "public oversight of Congress"-process must examine what systems, mechanisms, and other reviews Congress should have been doing or creating to identify, manage and mitigate these risks.

It is unacceptable, especially in the wake of the "we are bringing change"-mantra, for both leading Congressional parties to magically create the same excuses for having failed. The public should have been reasonably positioned to expect -- and provided --  leadership; and changed leadership, not more of the same excuses.

There Is No Requirement We Only Suffer One Financial Crisis At A Time

It's all fine and good to say, "Let's not place blame," but until we understand what really failed in Congress, we are throwing money at a poorly-understood problem. At best, without understanding what faile din Congress to identify and manage the factors contributing to a fragile economy, even with an infinite amount of money, we could teeter on a second financial crisis on top of this one.

After 2006, Congress did not better manage the most basic economic risk areas. The "obvious" questions are:

What else has this Congress ignored?

What other "promises of change" have been lip service?

As with pre-9-11 warnings, who got in the way of:

A. Conducting real economic risk assessments in both the executive and legislative branches;

B. Formulating real requirements to mitigate these financial risks; and

C. Making decisions on which risks were unacceptable and had to be eliminated?