Bankers Take the Stand
Get the popcorn ready, the much-anticipated Financial Crisis Inquiry Commission hearings start this week, and this time (unlike last month when the President himself summoned them to Washington) the executives from all the big Wall Street banks will actually deign to show up!
It's going to be the Ferdinand Pecora investigation all over again . . . kind of.
One key difference between the modern-day Pecora Commission, as some people are calling it, and the original is that the current commission lacks a Pecora--the crusading investigator whose riveting cross-examination of his era's bankers exposed Wall Street's excesses and inspired the New Deal banking reforms.
The web site What Caused the Crisis sponsored by the Roosevelt Institute--points out this weakness in the commission in an open letter signed by Joseph Stiglitz, Robert Reich, and William Black, among others, demanding that the commission appoint a single investigator with "a proven record of exposing fraudulent elites and institutions."
Unfortunately, there is no such individual on the current commission.
But there are a number of promising members.
Chief among these is Brooksley Born, selected by Nancy Pelosi, and dubbed the "Cassandra of the derivatives crisis" by the Washington Post for her far-sighted warning about credit default swaps ten years ago, when she was head of the Commodity Futures Trading Commission.
Last may, in a profile by Manuel Roig-Franzia, the Post described Born's fruitless efforts to warn Congress about the coming financial crisis:
"Before taking office, Born had been a high-octane attorney, an American Bar Association power player, a noted advocate of feminist causes and co-founder of the National Women's Law Center. But none of that carried much weight when she crossed over into government; for all her legal experience, she was a woman who wasn't adept at playing the game. She could be unyielding and coldly analytical, with a litigator's absolute assertions of right and wrong. And she was taking on Beltway pros, masters of nuance and palace politics. She marched into congressional hearing after congressional hearing -- pin neat, always with a handbag -- but no one really wanted to listen."
That has changed now that Born was proven right.
Born's nine other colleagues on the Commission include former Florida Senator and Governor Bob Graham, picked by Harry Reid, and Mitch McConnell and John Boehner's picks: vice chairman Bill Thomas and former Bush Administration economic advisor Keith Hennessey.
The politics of the financial crisis and ensuing bank bailout do not break down along Republican vs. Democratic lines.
Just ask Barney Frank, the liberal Massachusetts Democrat who is chairman of the House Financial Services Committee and author of regulatory legislation that, while it establishes a Consumer Financial Protection Agency, also supports the big banks by authorizing the Fed to pay outs $4 trillion in emergency funds in the event of another Wall Street crash. As Bloomberg columnist David Reilly opines: "So much for ‘no-more-bailouts’ talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule."
Tea Partiers and leftwingers alike are galvanized in their opposition to the "banksters" and their cronies on Capitol Hill.
If the Commission does its job right, it should put on quite a show for Americans of every political stripe.
How is it that we taxpayers are paying out billions in bailout money to banks that are using those funds to inflate their balance sheets and pay their executives bonuses? How come Goldman Sachs managed to lose investors' money in the subprime mortgage market, but the bank itself came out ahead by betting against those same money-losing investments?
Instead of the Obama Administration's tax on banks that may turn out to be a drop-in-the-bucket public relations ploy like the cap on bonuses, Yves Smith of Naked Capitalism suggests a windfall tax that directly tackles the misbegotten notion that the banks have actually earned their profits:
"The Administration is so profoundly captured by the banksters that it sees nothing wrong with what is happening, save the political fallout," Smith writes. "It’s perfectly OK for banks to go right back to status quo ante, looting their firms by paying themselves too much in bonuses and not retaining enough in the way of risk buffers. And why should they change behavior, now that it has been conclusively demonstrated that if they screw up in a big way, the government will run in, and they make even more money as a result?"
The banks deserve a big tax to pay back the bailout, Smith quotes the BBC's Robert Peston reporting, because their profits are "an unrepeatable jackpot, the consequence of the authorities’ bail-out of the economy, and not the result of their great prowess."
Add to that the rollback of regulations the original Pecora Commission inspired: Glass-Steagall, "too big to fail" banks, an SEC with teeth, and you have the whole script for the current crisis.
Let a real public hearing begin!
Ruth Conniff is the political editor of The Progressive magazine. To subscribe for just $14.97 a year, just click here.
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Comments
That, and the Auditing of the Federal Reserve, might be a little less, "Too little too Late.
Let's see some real prosecutions at the "Top Cat" level, with people in 3 thousand dollar suits going to jail.
But, it ain't Billions, we are talking here Ruth, it is Trillions, and that money has already been passed out to their cronies, World Wide, where they will have secured real assets with our money, while it was still worth something, which it will not be for long.
Now we will be oppressively taxed, as we are made to pay for their crimes.
Now let's see some reporting on Little Timmy Geithner's current Legal Problems, involving these crimes.
Most of these guys, have probably already bought homes in Countries, without extradition treaties with the US.
Even a Certain Former President, bought several 10's
of thousands of Acres, down in Paraguay, if you will recall, just before that seamless transfer of power to the Obama Presidency.
And just in case we don't like what has happened, when the American People finally and fully wake up ---
Well, other contingencies are perhaps in the works also, such as this little clue for us, as NorthCom is standing closely by ---
"Posse Comitatus" will now be known as "Posse Comatose"
http://www.whitehouse.gov/sites/default/files/2010executive_order.pdf
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release January 11, 2010
EXECUTIVE ORDER
ESTABLISHMENT OF THE COUNCIL OF GOVERNORS
By the authority vested in me as President by the Constitution and the laws of the United States of America,including section 1822 of the National Defense Authorization Act of 2008 (Public Law 110-181), and in order to strengthen further the partnership between the Federal Government and State governments to protect our Nation and its people and property,it is hereby ordered as follows:
Section 1. Council of Governors.
(a)
There is established a Council of Governors (Council).The Council shall consist of 10 State Governors appointed by the President (Members), of whom no more than five shall be of the same political party. The term of service for each Member appointed to serve on the Council shall be 2 years, but a Member may be reappointed for additional terms.
(b)
The President shall designate two Members, who shall not be members of the same political party, to serve as Co-Chairs of the Council.
Sec. 2. Functions.
The Council shall meet at the call of the Secretary of Defense or the Co-Chairs of the Council to exchange views, information, or advice with the Secretary of Defense; the Secretary of Homeland Security; the Assistant to the President for Homeland Security and Counter terrorism; the Assistant to the President for Intergovernmental Affairs and Public Engagement; the Assistant Secretary of Defense for Homeland Defense and Americas' Security Affairs; the Commander,United States Northern Command; the Chief, National Guard Bureau; the Commandant of the Coast Guard; and other appropriate officials of the Department of Homeland Security and the Department of Defense, and appropriate officials of other executive departments or agencies as may be designated by the Secretary of Defense or the Secretary of Homeland Security.Such views, information, or advice shall concern:
(a)
matters involving the National Guard of the various States;
(b)
homeland defense;
(c)
civil support;
(d)
synchronization and integration of State and Federal military activities in the United States; and
(e)
other matters of mutual interest pertaining to National Guard, homeland defense, and civil support activities.
Sec. 3. Administration.
(a)
The Secretary of Defense shall designate an Executive Director to coordinate the work of the Council.
(b)
Members shall serve without compensation for their work on the Council. However, Members shall be allowed travel expenses, including per diem in lieu of subsistence, as authorized by law.
(c)
Upon the joint request of the Co-Chairs of the Council, the Secretary of Defense shall, to the extent permitted by law and subject to the availability of appropriations, provide the Council with administrative support,assignment or detail of personnel, and information as may be necessary for the performance of the Council's functions.
(d)
The Council may establish subcommittees of the Council. These subcommittees shall consist exclusively of Members of the Council and any designated employees of a Member with authority to act on the Member's behalf, as appropriate toaid the Council in carrying out its functions under this order.
(e)
The Council may establish a charter that is consistent with the terms of this order to refine further its purpose,scope, and objectives and to allocate duties, as appropriate,among members.
Sec. 4. Definitions. As used in this order:
(a)
the term "State" has the meaning provided in paragraph (15) of section 2 of the Homeland Security Act of 2002(6 U.S.C. 101(15)); and
(b)
the term "Governor" has the meaning provided in paragraph (5) of section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122(5)).
Sec. 5. General Provisions.
(a)
Nothing in this order shall be construed to impair or other wise affect:
(1)
the authority granted by law to a department, agency, or the head thereof; or
(2)
functions of the Director of the Office of Management and Budget relating to budgetary,administrative, or legislative proposals.
(b)
This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
more
3
(c)
This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
BARACK OBAMA
THE WHITE HOUSE,January 11, 2010.