Well, at least the commission seems to fit the calling. They lost many golden opportunities to deeply understand the problems of the financial crisis. Don’t despair, it took a few iterations last time around during the Great Depression to finally find Ferdinand Pecora, who then brought justice into view. Also, blame Pelosi and the Democratic Party for not getting serious about an investigation and choosing an inept leader like Angelides — the entire country came to its knees. Mary Bottari writes today,
After that self-serving drivel, no wonder the God’s zapped the electrical system. There was a lot Greenspan could have done to rein in the housing bubble, not the least of which was simply telling people there was a bubble as housing prices began following an unprecedented and unsustainable path.
But electrical snafus are just the beginning of the FCIC’s problems. The FCIC is a 10-person panel assembled to report on the meltdown to President Obama later this year. The New York Times reported last week what was becoming increasingly obvious, the commission was in shambles. The commission waited eight months before having its first hearing. A top investigator resigned due to delays in hiring staff, no subpoenas have been issued and partisan infighting means few new documents have been released that would aid reporters in piecing together the crime scene even if FCIC investigators are not up to the task. Worse, it seems like the majority of staff have been borrowed from the complicit Federal Reserve.
These problems were on full display in last week’s hearings. The three days of hearings were marked by some heat, but little light. On day one, the commission let Greenspan blather on about how these types of crises were unpredictable. While Chairman Angelides tried to ask some common sense questions, Greenspan is a slippery eel and he slithered out of the room unscathed. An Elliot Spitzer with vast financial services knowledge and prosecutorial experience would have done better with Greenspan.
On day two, Charlie Prinz, former CEO of Citigroup, took center stage apologizing for his transgressions, but telling the FCIC that like a good captain he went down with his ship (by not selling his Citi stock). How the FCIC managed to make a hero out of the man who ran Citi into the ground is beyond me.
On day three, Fannie Mae execs took the stand. They were appropriately grilled about their inappropriate lobbying, but as economist Dean Baker points out, were not asked the key question: As housing experts why did you not warn of the housing bubble and take actions to dampen it? Baker was one economist who was loudly warning of the housing bubble as early as 2004. But the Fannie Mae execs successfully peddled the narrative that the institution was engulfed in catastrophic and unforeseeable decline in home values.
But the saddest lost opportunity of the week was in the questioning of Robert Rubin. Former Goldman Sachs executive, Clinton Treasury Secretary, and Citi board member, Rubin bears tremendous responsibility for creating the disaster by pursuing an extreme deregulatory agenda in the 1990s and then standing by idly as the consequences of that agenda unfolded. Rubin should have been pressed by multiple commissioners on the following: Do you regret pushing for the repeal of Glass-Steagall that helped create too big to fail firms and allowed Wall Street gambling to spread to Main Street banks? Do you regret deregulating derivatives and setting these “weapons of mass economic destruction” lose upon the world? Do you regret pushing through deregulatory trade agreements that spread our financial services model and risky financial products around the globe?
Inexplicably, Rubin was not even asked about the prior day’s testimony by Richard Bowen, Citigroup’s former chief of underwriting, who directly accused Rubin and other bank executives of violating their own risk management policies and ignoring warnings as early as 2006 that about 60 percent of mortgages were worthless. A full accounting of Rubin’s role in these events is critical given the strong role he still plays as a behind-the-scenes White House advisor.
Read the whole thing at PRWatch.org