In a recent Nation cover story, William Greider decried the lack of attention being paid by the media to the Financial Crisis Inquiry Commission (FCIC) charged with investigating the causes of the financial meltdown.
“The press has moved on. Financial crisis was last year’s story,” he wrote. But “how can Washington reform the financial system when we still don’t know what happened?”
On Friday, FCIC Chairman Phil Angelides was in DC to deliver a keynote address at a New America Foundation conference on financial reforms, jobs, housing and the dollar. Economists, policy-makers, activists and some press were in attendance, but coverage was once again scant, even though there are encouraging signs that the commission is now ready to kick into high gear.
Angelides told the audience that the ten-member bipartisan Commission will “examine the causes of the financial crisis, writing the official history of what brought our financial and economic system to its knees.” Throughout next week the FCIC will announce senior staff positions. Expect hearings “all throughout next year,” and subpoena power to be used to compel testimony and access documents when necessary. Where criminal conduct is suspected, referrals will be made to the Department of Justice or appropriate state attorney general.
“This accounting is desperately needed,” said Angelides. “The fact is that late in 1929, people were throwing themselves out of windows on Wall Street. This year they’re lining up for bonuses. There has been no serious self-examination on Wall Street of what has occurred and what should be in the future.”
The hope of progressives is that the FCIC will meet the high bar set by the 1930s Pecora Commission, whose investigation exposed Wall Street corruption and helped galvanize public support for New Deal reforms like the Glass-Steagall Act, the repeal of which is considered a contributor to the financial collapse. Angelides spoke of Pecora’s work serving as a model for this Commission.
“As we begin our work we take inspiration from what Pecora did because it was plain and simple,” he said. “It was an investigation that revealed real institutions and real practices carried out by real people. [Ferdinand Pecora] marched in National City Bank, he marched in JP Morgan, he marched in Chase Manhattan, he marched in the New York Stock Exchange. And people saw a set of manipulations that they vowed they would not see again and for decades we had a steady-state financial system–a balance of both innovation and regulation.”
Angelides said that what happened fourteen months ago–the freezing of credit in this country–isn’t nearly as consequential as what’s “happened in the months since then to the American people.” He pointed to 9 million people losing their jobs, 25 million people out of work or underemployed. Two million Americans losing their homes, 10 million in the foreclosure process, and many more expected to suffer the same fate.
“There is a hunger on the part of Americans to know what happened,” said Angelides. “There is a hunger to hold people accountable. There is a hunger to ensure that the people who acted irresponsibly, take responsibility.”
But perhaps the most important contribution the FCIC can make is helping citizens figure out where we go from here–what kind of an economy do we want to construct? How do we prevent a recurrence of this kind of meltdown?
While the Commission won’t propose specific legislation itself, Angelides argued that–if it does its job right–it will help “deepen the national dialogue about the need and the shape of reform.”
“We haven’t gotten to the heart of what we want our financial system to be,” said Angelides. “Do we want it to be a system that is in and of itself mainly about making money? Or do we want it to be a capital system that in the end is the driving force that helps create jobs and broadly shared prosperity?”
Critics have voiced disappointment that the hearings have not yet begun, and fear that they are arriving too late, since Congress is now working on (already compromised) financial reform bills in both the House and Senate. Angelides took issue with that view.
“True reform does not come with the sweep of legislation alone,” he said. “New Deal reforms were a product of many years of discussion about what we wanted our financial system be. Ultimately, true reform is about cultures and values–what’s considered acceptable and optimal in the marketplace, and also what commitment you have at the regulatory sector and what capability you have at the regulatory sector…. This discussion of reform is one that is not about to end but one that is just beginning.”
As that discussion begins, Angelides understands that people rightly want to see accountability–as opposed to record bonuses for bailout recipients while the rest of the nation continues to suffer. Angelides says he is determined to follow the facts wherever they lead and take appropriate action, but he sees the potential for a far greater contribution than merely busting corrupt fat cats.
“Our job is not as we see it to embarrass people but to produce facts,” he said. “And if facts embarrass people, so be it. And if in fact they unveil wrongdoing, so be it…. The most important thing that we can do is to shed light, and not heat. To unveil what happened, so that Americans can have a clear understanding of history, so we do not repeat it. And what we do [then] is we help foster the kind of deep debate about financial reform that this country needs and deserves.”
Greg KaufmannTwitterGreg Kaufmann is a contributing writer for The Nation.