Truth: how bailed-out banks got whole

11 January 2010 |permalink | email article

This week, 16 months after the crash precipitated by the 9/15 failure of Lehman Brothers wrecked the American economy, a long-awaited bipartisan commission Congress created last year to investigate how the meltdown happened begins its closely watched public hearings.

The ten-member Financial Crisis Inquiry Commission chaired by Phil Angelides, who as California’s Democratic state treasurer from 1999 to 2007 pressed for disclosure and transparency for investments by CalPERS, the state pension fund.

Angelides told New York Times columnist Frank Rich in two interviews late last year that he wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” – from traders on the ground to the board room – and all at the expense of ordinary Americans. Untangling the rubble is an awesome challenge.

The panel’s key model is Ferdinand Pectora, the legendary prosecutor and chief counsel to the Senate Banking Committee who in 1933-34 held Wall Street – indeed the nation’s entire financial aristocracy – to account for the 1929 crash. Pecora’s principal target was the Morgan Bank, such a paragon of rectitude that the IRS never bothered to audit its tax returns. Not a single one of 20 partners paid a dime of income tax in 1931 or 1932 despite earning millions from stock underwriting.

The big-name witness list includes officials at the New York Fed, then led by Timothy Geithner, now Treasury secretary, Henry Paulson, his predecessor, and Fed Chairman Ben Bernanke. The underlying question now is whether between the blame game and predictable mea culpas Wall Street’s status quo will remain basically intact.
.

161