The Financial Crisis Inquiry Commission: Meaningful or Milquetoast?

Every once in a long while a commission can change America. The 1954 Army-McCarthy hearings destroyed Senator Joe McCarthy by revealing his out-right viciousness and insincerity through the new media of television. The Watergate hearings helped to bring down a president. And the Pecora hearings in 1933 uncovered Wall Street scam after scam that enriched the bankers who crashed the financial system. Those hearings led to the financial reforms and regulations that protected us from another Great Depression, until they were eliminated to our detriment over the past thirty years.

The Financial Crisis Inquiry Commission also wants to make history. It has yet to pick up a name, but perhaps we’ll be soon calling it the Angelides Commission, after its chairman, Phil Angelides, the former California State Treasurer. Angelides set the bar high during a recent interview cited by Frank Rich in the New York Times

[Phil Angelides] wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened.

That’s the kind of language used by Ferdinand Pecora, the lead investigator for the 1933 commission, to humiliate the bankers who were stealing from the American people. But Angelides finds himself in a more difficult spot. First of all, he has to contend with more Republicans on his committee who may side with the bankers. After the 1933 Democratic landslide, Pecora and the Democrats were in complete control. Second, Pecora had the full backing of FDR who wanted to slam Wall Street. It’s unclear, to say the least, how much backing Angelides will get from the Obama administration.

But, Angiledes has one thing going for him: the American people are plenty angry just like they were in 1933. The public knows it’s been ripped off. It can’t comprehend how it’s possible for Wall Street bankers to be earning record amounts after so recently crashing the US economy and getting trillions of dollars of bailouts. This Wednesday the heads of Goldman Sachs, JP Morgan, Morgan Stanley and Bank of America will have a chance to explain why they are about to waltz off with gigantic compensation packages while more than 28 million Americans are without jobs or forced into involuntary part-time work.

One more major difference between now and 1933 are paid flacks, handlers and lobbyists who will attempt to inoculate the bankers from harm. You can expect these Wall Street CEOs to come into the hearings with carefully prepared statements that will slant reality their way and avoid all controversy. After hours and hours of prepping, they will respond to sharp questions more like voice-mail options, as the Angelides seeks to push the right buttons. The goal is to get Angelides to hang up. It will take enormous skill to get anything that resembles unrehearsed responses.

Phil Angelides, in fact, has to be better than Ferdinand Pecora. He will have to rip through layer after layer of hype, spin and half truths without the help of unrehearsed witnesses, a resurgent Democratic party or of the President of the United States.

Bob Borosage asked me to live blog to you during these hearings. He picked the right guy because I'm a junkie for this kind of theater. Also, he's under the illusion that I know something about finance because I've written a book about the crash. In any event, throughout the hearings, I’ll be providing you the play by play as it happens. Let’s hope there’s something to report other than PR releases.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future