Word is circulating in Washington that members for the Financial Crisis Inquiry Commission will be named this week.
The commission is supposed to resemble the 1930s Pecora commission that dug into the culprits behind the Great Depression and laid the groundwork for major bank reform. But that will only be true if the commission is run by aggressive seekers of truth, independent of the financial industry, willing to use their subpoena power, knowledgeable enough to have warned us of impeding crisis in the first place despite market cheerleading from the political and media establishments.
Will the maximum sentence given to Bernie Madoff, after he ruined the lives of many, put a renewed spotlight on the need for tough reforms?
As Lotke wrote:
So Madoff got 150 years for breaking into the bank. Fine.
But what about the guard who was asleep out front? What about the clerk who forgot to lock the door? What about the $300 billion that Citigroup walked out with from one vault, and the $200 billion that AIG took from another? Does anybody know where that money went or what we got for it? Don’t they get in trouble too? Did you know that, or do you know why, Goldman Sachs is paying its biggest bonus payouts in its 140 year history?
That’s why we need a Pecora Commission.
Indeed, for all the misery Madoff and his Ponzi brethren have caused, none of those scam artists were the cause of the crisis that brought the financial system to the brink. If anything, it was the financial crisis that helped flush out Madoff and his scurrilous ilk, as many investors rushed for the exits at the same time.
So that’s why Congress needs to act quickly to get up and running a bipartisan commission to study the underlying causes of the financial crisis.
Speculation from Reuters last week on who might be named was not terribly encouraging, though most of the names floated clearly were coming from conservative circles, as Republican leaders will pick four of the 10 members. Robert Kuttner explained in the Huffington Post:
Among the names leaked is just one person with the stature, expertise, and resolve to run a tough investigation (if she were chair)–Brooksley Born …
…On the Republican side, with one exception, the leaked names could be an alumni society of the people whose policies helped cause the collapse. The absolute howler in the list is former senator Jake Garn of Utah, a tireless proponent of financial deregulation. Among other travesties, Garn sponsored the Garn-St. Germain Act of 1982, the law that allowed savings and loan associations to become speculators’ playgrounds, and led directly to the S&L collapse.
Another proposed Republican is Bill Thomas, former chair of the House Ways and Means, a legislator who never met a financial special interest he didn’t like; and former Republican Senator and presidential candidate Fred Thompson…
…The only other Democrat on Reuters’ leaked list is former Florida senator and governor Bob Graham, a self-identified New Democrat who served on both the Senate Banking and Finance Committees. Missing, except for Born, are people with deep knowledge and informed criticism of the abuses that led to the crisis.
It does not have to be this way.
Dismay and disgust at Wall Street behavior is prevalent among voters across the ideological spectrum. It is not necessarily in either parties political interest to appoint industry shills and knee-jerk opponents of regulation. But they would only pay a political price if people knew about the appointments.
However, the media is great at covering the spectacle at the end of the debacle — like the Madoff conviction — it is not as good at informing Americans at the beginning of a process when their input might actually make a difference.
Most Americans do not know that the Financial Crisis Inquiry Commission is on the verge of naming its members. Nor do they know what difference the right people could make, not just in nailing the culprits behind the market meltdown, but ensuring that we enact reforms that actually reform the flaws in our flimsy regulations.
Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, House Minority Leader John Boehner and Senate Minority Leader Mitch McConnell will be naming the commission members soon, most likely this week. Now is the time to let them know the type of person you want to have subpoena power on your behalf.