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TechnoratiPecora Swirling: Appointing the Financial Crisis Inquiry Commission
Reuters is out with an authoritative story on finalists being considered for the Financial Crisis Inquiry Commission, the investigative body created by Congress to launch a full-scale investigation of the financial crisis in the spirit of the famous early 1930s hearings led by Ferdinand Pecora.
Those famous investigative hearings produced the facts and momentum for the major New Deal financial reforms. If the Reuters story is accurate, progressives have a lot of work to do in a few short days while nominees are being finalized, before the moment is lost.
Under the law creating the commission, which was signed by President Obama in late May, it is to have ten members, six Democrats and four Republicans. They are to be appointed by the House and Senate majority and minority leadership, respectively.
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. As chair of the Commodity Futures Trading Commission in the late 1990s, Born proposed regulating over-the-counter derivatives, of the sort that helped crash the economy. For this attempt to spoil the party, she was excoriated and isolated by an old-boys' mob that included Alan Greenspan, Robert Rubin, Lawrence Summers and Gary Gensler. Incredibly enough, Gensler, an Obama appointee, now holds Born's old job as chair of the CFTC. More than a decade and several meltdowns later, the Obama administration's 88-page white paper is ambiguous on the subject of whether and how to regulate customized derivatives. Born is just the sort of person the commission needs.
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 one commendable Republican on the list--and I hope my support doesn't spoil it for him--is Alex Pollock of the American Enterprise Institute. Pollock has been an honest critic of the financial bailout program and the weak measures undertaken by both the Bush and Obama administrations to stem the epidemic of mortgage foreclosures. In his testimony and speeches, Pollock regularly calls for New Deal-style remedies, such as the Reconstruction Finance Corporation or Roosevelt's Home Owners Loan Corporation, which refinanced one mortgage in five, and spared a million families foreclosure.
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.
Some good nominees would be former SEC Commissioner Harvey Goldschmid, now a law professor at Columbia; Elizabeth Warren, Chair of the Congressional Oversight Panel; Damon Silvers, the AFL-CIO's top expert on financial markets and Deputy Chair of the oversight panel; economists Joseph Stiglitz of Columbia or Nouriel Roubini of NYU or James Galbraith of the University of Texas or Dean Baker of the Center for Economic and Policy Research; one-time Wall Streeters and now astute financial critics Nomi Prins, Rob Johnson, Ron Bloom or Richard Bookstaber; former financial regulators Bill Black or Ellen Seidman; or law professors and deregulation critics Frank Partnoy of the University of San Diego or James D. Cox of Duke.
Perhaps it was too much to hope that this commission would be a chance to investigate root causes and mobilize public sentiment behind the sweeping reforms that are needed and not yet forthcoming. Obviously, Republican House Leader John Boehner and his Senate counterpart, Mitch McConnell, are not about to put serious critics of deregulation on this panel. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, however, were astute enough to put Elizabeth Warren and Damon Silvers in charge of the Congressional Oversight Panel (COP) that was created as a condition for giving the Treasury $700 billion in bailout funds last fall. Ever since then, the COP has been the best source of independent thinking and investigation in town.
For the new Pecora Commission, Pelosi and Reid need to do better than finding a predictable list of retired and safe Democratic politicians. This is a rare chance to light a real fire on behalf of deep reform.
10 Comments so far
Show AllThe mission of any commission these days is to explain to the public why no one individual or group thereof was accountable for what was a broad "systemic" failure.
Everyone was wrong and no one was wrong and we need to look forward, not dwell on the past. We need to create a broad systemic authority, the Financial Stability Board, to oversee the whole system, an authority that can see the forest for the trees and provide systemic oversight by riding herd over all the smaller players who aren't wise enough to see the Big Picture.
And it is a Big Picture, for it is a global system, friends. Therefore, we need to have an international character for the FSB, and it would be convenient to locate it in Basel, Switzerland, a nice promontory from which to view the activities of all G20 players in the great global system. There is a nice building conveniently located there called the Bank for International Settlements.
My bet is that this commission to investigate the financial catastrophe will be eerily reminiscent of the 911 Commission, which gave us the directorate of national intelligence and the consolidation of intelligence and police powers and laid the groundwork for global intelligence and police cooperation.
Finance is a secretive and malevolent anti-democratic shadow world that is hand in glove with clandestine intelligence operations and secret police. Not only will this commission fail to hold anyone accountable, as with the 911 Comission, it will provide a rationale for the continued eyes-only operations of private finance. It will not challenge the private global banking cartel in any fundamental way. It will, in the end, provide justification for the global expansion of this cartel and the consolidation of its power.
This is highly ironic since it is the failure of the private banking cartel and the culpability of many players within it, including but not limited to the Chairman of the Federal Reserve, the head of the SEC, the heads of the bi investment houses and so on, that is the cause of this crisis. The private banking cartel should be dismantled. This commission will, however, exonerate it, but provide the basis for its expansion as a global entity.
That is why no good people will be chosen to make up this committee, and if one or two happens to be selected, they will resign shortly thereafter in disgust and the press will never ask them why.
This is the work of your Obama, friends. Enjoy!
In the journalistic pecking order, Reuters somehow scoops the usual inside-the-beltway US media suspects with this trial baloon, naming all four potential Republicans on the Financial Crisis Inquiry Commission, and two of the six prospective Democrats. None of the people whose names were leaked commented to confirm, or to deny, the accuracy of the Reuters article.
Brooksley Born would be a great choice, and former Senator Bob Graham isn't all that bad (if my memory is correct, while in the Senate, he spoke up against the 2002 Iraq War AUMF resolution after being briefed in super-classified oversight role about Iraqi weapons of mass destruction).
Kuttner is right. This Commission is a rare chance to take a broad range, critical look at things like credit default swaps, AIG's insurance market thereon, the role of the securities rating companies, and how the so-called shadow banking system arose and actually operated before the big 2008 meltdown. I'll hold off on my cynicism until I see who the appointees actually are, and who would likely swing the majority vote balance.
Bill from Saginaw
Big mistake to appoint suspects of the disaster. It won't lead to the truth and won't let the chips fall where they may.
ezeflyer, that was no mistake, that was on purpose.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
Politicians cover each others asses like most professionals do. How long before we realize they're technologically obsolete?
And the circus goes on. When GE learned that they weren't to be included (due to the fact they weren't a financial institution) in the TLGP giveaway (financed by taxpayers) they sent a team to DC to successfully convince the government they should be included, and a special provision was made to do just that.
Yr Obd't Servant, you got it just right. I am sick of this. It's like we have fallen off a cliff with no bottom.It won't end until the rich have taken everything there is to take and we look like Soylent Green. To me, the worst part is the success of the propaganda machine to distract and divert blame so they have us turning on each other. If the founding fathers could only see what has become of our fourth estate and our Constitution.
We already know where this reform is headed, just as we knew where the 9/11 commission was headed, by the people chosen to do the investigation. It's the same as letting the banks stress test themselves, keeping toxic assets off the books, and Ta Da! They're doing just fine! It probably isn't fair to start whining before there are even any appointments, but there does appear to be a huge resistance to reform out there. And Obama appears incapable of tough love in his drive for bipartisanship. Believe me, there would be no talk of bipartisanship if the Republicans were in power. They would be steamrolling over the Democrats if they had this many votes. And the Democratic leadership has shown it can whip the votes when it wants to (or is told to by the White House), as in war funding. Basically, we are being had.
It's time for a Main Street Party.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
I am supremely confident that, between the mediocre aims of the Obama administration, the lack of sincerity and efficacy of the Reid, Pelosi, et.al., the general bumbling of all the conspiratorial contributors to the membership of this commission, it will be inhabited and infested by a bunch of old, tired hacks who will lack gumption, virility and any potency whatsoever. And that is if we are lucky. When our government is not mastering the art of standing still, and maintaining the status quo, it is moving backwards.
Bill Clinton was re-branded and forgiven for having kept his fellatio star under his desk in the Oval Office, and look at how lacking in overall character he was and still is.
If the "sins of the flesh" are just that and have nothing to do with competence, perhaps it is time to rise above all that sordid nonsense and appoint a pit bull terrier to the commission, as in Eliot Sptizer. He is made of far better stuff than Clinton and could be counted on to tear ass as a member of this commission.
I'll repeat a bit of a comment I published last August regarding the establishment of a "Truth Commission" to investigate Bush administration wrongdoing.
Here, the topic is the economy, so the players must be skewed accordingly. But the principles are still the same:
__________________________________
Amerika has the equivalent of a Senior Tour for such burlesques; an elite bipartisan boatload of Esteemed Wise Persons deemed by their almost-peers (for they are themselves peerless) and the corporate media shills to have Impeccable Credentials and Sterling Reputations. They are venerated for being High-Minded and Highly-Principled; they are reputedly persons of Keen Insight and Unimpeachable Integrity.
Who would it be this time around? George Mitchell? John Danforth? Henry Kissinger? Madeleine Albright? Lee Hamilton? Warren Rudman? Sandra Day O’Connor, perhaps, even Robert Bork? James A. Baker? Bob Kerrey, maybe, moving up from the minors?
No doubt such charlatans will put on a good show, with appropriate Mega-hyped Earnest Media Coverage. The “half-full” CD contributors will faithfully follow the bouncing ball and urge relentless public pressure to ensure that these co-opted and compromised scam artists pursue the issues rigorously, and present a comprehensive and unsparing final report.
And that's only the First Act! Afterwards, we will be incessantly scolded or cajoled (as Robert Reich cajoles in a Salon.com article today) to Keep Up the Public Pressure and hold Obama's cloven hooves to the fire to "make him" implement True Reform-- even if we have to cross our fingers and vote him in for that indispensible second term!
· Yr Obd't Servant
"For the new Pecora Commission, Pelosi and Reid need to do better than finding a predictable list of retired and safe Democratic politicians. This is a rare chance to light a real fire on behalf of deep reform."
The leadership records of Pelosi and Reid have demonstrated, if anything, a complete aversion to reform. Obama may as well let Rush Limbaugh appoint these members.
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