Pecora II Meets, Grassroots Mobilizes

In their first meeting Wednesday, members of the Financial Crisis Inquiry Commission—often characterized as the second coming of the Pecora Commission that investigated the causes of the Great Depression—clarified how they see their mission and what we can expect.

Also, at a news conference that followed closely behind the commission meeting, a coalition of progressive activist organizations laid out their expectations [1] for the commission and announced an initiative to give the commission investigative tips and citizen input.

That effort will include the launch of a website—http://tellthecommission.com/ [2]—and a toll-free number, 1-888-234-1763, where citizens can leave investigative tips and comments. The phone line and the website are expected to be up soon.

Commission Chairman Phil Angelides said that citizens should not expect the commission to champion a particular ideological framework for reform. "First of all, it is essential that our investigation proceed on the basis of fact and evidence—and not according to the opinion or political leanings of any member of the Commission or the Congress that empowered us," he said in his opening statement.

Both he and vice chairman Bill Thomas, a conservative Republican and the former longtime chairman of the House Ways and Means Committee, said it was important for the committee to produce findings that will produce a unanimous agreement.

One obvious question will be whether the quest for unanimity will short-circuit the need for a frank assessment of the policies as well as the players responsible for bringing the nation's economy to the brink of collapse. Angelides and Thomas both promise that it won't.

In pulling together the facts needed for that assessment, Angelides announced an ambitious timetable. The commission this week hired an executive director, Thomas Green, a veteran investigator for the California Office of the Attorney General who had worked on high-profile cases involving Microsoft, tobacco companies and El Paso Natural Gas.

The commission will be filling out its staff of investigators over the next several weeks, culling from a flood of resumes Angelides said the commission has already received. In October, the commission will be asking agencies and companies to preserve records that the commission may want to review. Investigators will begin their interviews in November, and a schedule of public hearings in Washington and other locations will start as early as December.

Angelides and Thomas also said that the commission members have been talking to key congressional committees that have begin working on various bills related to financial reform, such as legislation that would create a new financial consumer protection agency. Angelides said that it was important for the committee's work to be relevant to financial reform efforts in Congress, and several commission members stressed that it was important for the Congress to not feel compelled to wait for the commission to issue a finaal report—which would be due at the end of 2010—before acting on legislation needed to prevent a repeat of the financial crisis. Thus the commission may shift its work focus to adjust to what is moving forward in Congress.

At the same time, Angelides stressed that his goal for the commission's work is that "it have lasting value beyond the immediate" crisis and legislative remedies spurred by it.

Much of what Angelides and Thomas said would be good news for the coalition of groups—including the financial report group A New Way Forward, Common Cause, MoveOn.org, Public Citizen, U.S. Action, the Campaign for America's Future and several key labor groups—that signed a petition today setting out what they expect from the commission.

Included in their petition were calls for "interim reports and memoranda so the public has an opportunity to learn about what caused the financial crisis while the national discussion is taking place," hearings in various parts of the country where "the voices of the victims" can be heard, and the use of the commission's power to make criminal referrals and "name names" of people responsible for causing the financial crisis.

"The Angelides Commission -- if it fearlessly lays out the facts, exposes the excesses, the deformed incentives, the frauds and crimes, that are at the root of the current crisis has the potential of playing a similar role to that of Pecora," said Campaign for America's Future co-director Robert Borosage in a statement [3]. "Nothing is more important than getting to the roots of what happened, and telling that story to Americans, generating the public pressure that can overcome the powerful financial lobby to push Congress to pass the financial reforms vital to making certain we do not repeat the follies of the past."

Though Angelides wants to keep the commission from being blown apart by ideological land mines, some of the opening statements bore hints of the challenge ahead.

Brooksley Born, a lawyer and former chair of the Commodity Futures Trading Commission, sketched out the role unregulated derivatives trading played in the massive losses on Wall Street and the wreckage in the credit markets and said she was concerned that as politicians and some economists pronounce the economic crisis as easing, "there's a danger that our sense of urgency may diminish."

"The country can't afford to listen to the siren song of deregulation," she said.

Sitting across from Born was Peter Wallison, a scholar at the American Enterprise Institute and a champion of deregulation and conservative economic policies. A key issue he raised was the extent to which government policies promoting home ownership among people who were not financially equipped to be homeowners was responsible for the crisis.

Wallison asks an important question, but questions like that one have been used by too many conservative ideologues and talk-show hosts to divert attention from the shenanigans of Wall Street billionaires while focusing ire on frequently moderate-income families who were coaxed, often unwittingly and fraudulently, the companies controlled by these billionaires into unsustainable deals.

What will help bolster the commission's work and keep the commission members on task is sustained input and monitoring from the grassroots. The commission needs our knowledge, our stories, and our encouragement when they are asking the right questions and producing useful answers that inform the drive for change.