Time for a Grand Inquest on the Financial Crisis

Time for a Grand Inquest on the Financial Crisis

Treasury Secretary Tim Geithner has called for “sweeping regulation” of the financial community, beginning a discussion of how we restructure the banking system—in and out of the shadows—as we emerge from what Robert Kuttner calls the Great Collapse. Literally trillions have already been committed in loans, guarantees, swaps, direct equity to stave off a complete financial collapse, even as the real economy declines.

But before we decide on the salvation, we need a public probe of the fall. What caused the Great Collapse? We need a grand inquest—either a special congressional committee or an independent commission like the 9/11 Commission armed with subpoena power—to expose misbegotten policies, malpractices, and mistaken ideas that allowed the wizards of Wall Street to transport us over the cliff.

In the 1930s, the dramatic hearings by the Senate Banking and Currency Committee became known as the Pecora Commission, after Ferdinand Pecora, the fierce former assistant prosecutor from New York who served as general counsel. Born in Sicily, the son of an immigrant cobbler, Pecora was a crusader. As counsel, he hauled the barons of Wall Street before the committee, and took them apart with often withering cross examination. By the time Pecora was done, the hearings had captivated the country’s attention and, as historian Ron Chernow reports, Senator Burton Wheeler of Montana was comparing the bankers to Al Capone and the public began calling them “banksters,” rhyming with gangsters.

The Senate committee unearthed the assorted frauds, the abuses, the Ponzi schemes that led to the 1929 crash. And in doing so it provided both the case for reform and built a public demand in support of it.

via Time for a Grand Inquest on the Financial Crisis | OurFuture.org.