Posted by Ruth Conniff on January 12, 2010

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.