Wall Street Probe Needs Your Vigilance

President Obama's signing of a financial fraud crackdown bill this week has been largely overshadowed by the erroneous and irresponsible rantings of Vice President Dick Cheney and his right-wing fear-monger allies, and that's unfortunate for two important reasons.

One, it's a significant victory progressives should celebrate. In addition to giving the federal government new tools to detect and punish the kind of law-breaking and deception that is at the root of the economic crisis, it creates a "Financial Crisis Inquiry Commission" charged with examining "the causes, domestic and global, of the current financial and economic crisis in the United States."

This commission is charged with playing the same role that the Senate commission led by Ferdinand Pecora in the 1930s did in exposing the wrongdoing and ethical breaches that precipitated the Great Depression. The 10 members of the commission will be chosen by the Senate and House leadership. It has a broad mandate to probe the operations of financial markets, regulatory agencies, compensation structures, tax policies—in short, all of the major factors that drove the actions that led to the economic crisis. It will have the power to subpoena witnesses (with the caveat that either the Democratic chairman and the Republican co-chairman agree or that a bipartisan majority of the commission agrees) and is charged with reporting wrongdoing that it uncovers to either the Justice Department or the appropriate state's attorney general.

President Obama, in signing the bill, noted that the commission was important "so that we make sure a crisis like this never happens again."

The other reason that this story should have gotten more attention is the signing statement [1] that Obama attached to the bill. That statement says, in part:

Section 5(d) of the Act requires every department, agency, bureau, board, commission, office, independent establishment, or instrumentality of the United States to furnish to the Financial Crisis Inquiry Commission, a legislative entity, any information related to any Commission inquiry. As my Administration communicated to the Congress during the legislative process, the executive branch will construe this subsection of the bill not to abrogate any constitutional privilege.

This could be nothing more than the White House rattling sabers, but given the Bush administration's record of using signing statements as bald-faced defiance of congressional intent, it behooves the movement to be on high alert. This is a potentially troubling signal that the administration reserves the right to obstruct the commission if it probes too deeply into the now-opaque decisions made by, for example, the Treasury Department in disbursing bailout money through the Troubled Asset Relief Program.

That is why the next critical decision that we will have to relentlessly push is the appointment of a tough-minded commission leader. That will be the job of Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, who was an active proponent of the Pecora Commission idea. Elizabeth Warren, the expertly probing chairman of the special congressional committee overseeing the Troubled Asset Relief Program, has exhibited the kind of leadership that this job needs.

What's also clear is that we will have to watch the watchdog. The administration could hamstring this commission with constitutional privilege claims, and Republican appointees could cripple the commission to score political points and protect its Wall Street bankrollers. Finally, a media preoccupied with what it perceives to be sexier issues and weakened in its capacity to do its own investigative journalism could allow the commission's work to fall into obscurity, thus robbing it of its power to drive fundamental reforms. We will have to be ready to push the commission to confront the tough questions; to call out the obstructionists, regardless of who they are; and to amplify the commission's findings as we forge new and better rules for our economy.