He's No Ferdinand Pecora: Phil Who?!?

Nine Better Choices to Investigate Wall Street

Do you know who's on the "Financial Crisis Inquiry Commission" ("FCIC"), the 10 member Congressional committee that's now investigating the (ongoing) financial crisis?

Neither do I -- and neither, I submit, do the vast majority of Americans. In fact, I'd be shocked if 5 in 100 knew that the FCIC existed. (If you're a fan of Jay Leno's "Jay Walking" segment, apparently there are plenty of people who don't know who George Washington or Abraham Lincoln are -- let alone Joe Biden or Nancy Pelosi.)

The FCIC, of course, is the heir to the infamous (Ferdinand) Pecora Commission, which laid bare Wall Street abuses leading up to the 1929 stock market crash, and set the stage for overhauling this country's financial regulations.

Regulations such as Glass-Steagall, the Securities Act of 1933, and the Securities Exchange Act of 1934 -- regulations that were highly effective, and worked as intended for almost 70 years (the financial - regulatory equivalent of getting 300,000 miles on your last car).

Deafening Silence

In fact, the FCIC has been meeting since Summer, and is headed by Phil Angelides, the former Treasurer of California (Phil who?!?)

With the exception of Brooksley Born, former CFTC Commissioner (and famous would-be regulator of credit derivatives) . . . I can't name, or even recognize, a single other commissioner.

Which is a double shame, for two reasons: 1) today's financial crash calls for the most serious kind of inquiry, conducted by the wisest, most experienced people available; and 2) we're blessed with many such people, presumably ready, willing, and able to serve -- if only asked.

All-Star Lineup

In that vein, here's a short list of political and business luminaries who should have been chosen for the committee, in addition to Born (I'd then let the panelists choose their own chair).

Paul Volcker. "Tall Paul." Who knew that a public servant overseeing Wall Street could be wise, scrupulously independent, and, well, public-spirited? If there were a financial Mount Rushmore . . he'd be on it.

John Bogle. One-time mutual fund pioneer, now full-time thorn in the industry's side (they deserve it).

Jeremy Grantham. Legendary investor, scathing (and correct) Wall Street critic.

Bernie Madoff. Yeah, he's still going to burn in Hell, but using his knowledge to repair the system he defrauded might buy him a little redemption.

Marcy Kaptur. Ohio Congresswoman (and MIT grad) who had the courage to call out Goldman Sachs. Longest-serving woman in the House of Representatives.

Elizabeth Warren. Harvard Prof. who's in line to head the Consumer Financial Protection Agency -- if it's ever created.

Nell Minow. The conscience of corporate America (not an oxymoron). Longtime shareholder activist (with Bob Monks) at the Lens Fund; co-founder of The Corporate Library. World-class expert on corporate governance, executive compensation.

Simon Johnson. Former chief economist of the International Monetary Fund. Who knew that all his experience helping Third World, "Banana Republics" clean up their finances would prove so relevant to the U.S. today?

Ross Kaplan. As a Minneapolis-based Realtor, has great insight into housing market; plus, brings a "non-Beltway" perspective to the financial mess. Other credentials: former corporate attorney and CPA; Stanford econ degree; widely published and quoted blogger. Founded Bulletin Boardroom, Inc. in 1992 to harness corporate governance to then-emerging technologies.

(Regarding that last choice: hey, it worked for Dick Cheney! If you don't recall, George Bush picked Cheney to vet his VP choices in 2000 -- and Cheney picked himself.)

Just to make clear that the Committee has a broad mandate: make sure that it has sweeping subpoena power, an unrushed timetable -- and no less than than 20% of the budget Ken Starr got.

P.S.: Every good team has a deep bench. Here are some honorable mention picks: Joseph Stiglitz, Floyd Norris, and Thomas L. Friedman.

Ferdinand Pecora*

Waiting For Accountability, Closure

"Our current stock market slump and housing bust can seem like natural calamities without identifiable culprits, creating free-floating anger in the land. A public deeply disenchanted with our financial leadership is desperately searching for answers. The new Congress has a chance to lead the nation, step by step, through all the machinations that led to the present debacle and to shape wise legislation to prevent a recurrence."

--Ron Chernow, "Where is our Ferdinand Pecora?"; The New York Times (1/6/2009)

Imagine if a spokesman for the National Transportation Safety Board ("NTSB"), at a press conference today, announced that, effective immediately, it was suspending its investigation into the US Airways crash into the Hudson on Friday.

"We simply can't justify risking our divers' safety in the river's treacherous currents," the NTSB spokeperson said. "What's important at this sensitive juncture is that we focus our energy on moving forward, not looking back, and not waste precious financial resources looking for scapegoats."

The uproar would be instantaneous and deafening.

U.S. air travel is the safest in the world precisely because after each and every mishap, the FAA, NTSB, the airplane manufacturer and all other relevant parties comb the crash site looking for clues, then exhaustively analyze them until they've located the cause(s).

Would anyone seriously argue today that that spirit of objectivity, scientific inquiry, and regard for the public's (financial) safety even remotely describes Washington's stance towards modern-day Wall Street?

There are times when it's appropriate to extend an olive branch to a vanquished foe ("with malice toward none, with charity for all . . "). However, what's needed in the wake of today's ongoing financial calamity isn't magnanimity (or amnesia), but scrutiny and accountability. Without those things there is no closure, and without closure there can be no recovery -- never mind preventing recurrences.

"Charity for all" can wait until Obama's second Inaugural address.

(Another year of George Bush, and "charity for all" might very well be what everyone's in line waiting for.)

*Ferdinand Pecora, who's overdue for a posthumous 15 minutes of fame, was the lawyer who led Congress' investigation into the Stock Market Crash of 1929.