Will the Angelides Commission = the Pecora Commission?

With the appointment today of the 10 members of a congressional commission to investigate the financial meltdown, many people are hoping that the spirit of Ferdinand Pecora once again walks among us.

Pecora was the general counsel of the Senate Banking Committee who in 1933 and 1934 investigated, in spectacular fashion, the Wall Street hijinks that preceded the 1929 stock market crash. Sicilian-born, the hard-boiled Pecora showed not an ounce of deference to his quarries, who included J. Pierpont Morgan Jr. and the heads of such other august Wall Street families of the era as the Whitneys, Rockefellers and Lamonts.

Can the new Financial Crisis Inquiry Commission, which will be headed by former California Treasurer (and 2006 gubernatorial candidate) Phil Angelides, measure up?

Here's the credit side of the ledger: The bipartisan panel (six Democratic appointees, four Republicans) has the explicit backing of the Democratic-controlled Congress and the White House. Among its members is a former financial regulator, Brooksley Born, ex-chair of the Commodity Futures Trading Commission, who tried unsuccessfully to tighten the regulation of the Wild West of derivatives trading in the 1990s.

And there's plenty to investigate. The roots of the economic and financial crisis can be found in the commercial banking, investment banking, mortgage trading, credit and derivatives industries. (Have I left anything out?) The behavior of Wall Street investment houses, which played both sides of many trades, enriching insiders while impoverishing retail investors and other outsiders, resembles the abuses Pecora identified in his hearings and his 1939 book "Wall Street Under Oath." 

Yet there's room for pessimism. Several members have been inside the investment industry, including Angelides and Heather Murren, another Democratic pick. The ideological gulf on the panel is wide, from Angelides and former Sen. Bob Graham (D-Fla.) on the left to Douglas Holtz-Eakin, former economic advisor to GOP presidential candidate John McCain, and Peter Wallison, an executive of the conservative American Enterprise Institute, on the right. The risk is that the commission will either fragment along ideological lines or, in an effort to craft findings that garner unanimous approval, it will muffle its guns.

Pecora had more leeway. He was a lifelong renegade, an anti-Tammany Democrat who had supported Republican Teddy Roosevelt's breakaway Bull Moose presidential candidacy in 1912. Ron Chernow described him in his book "House of Morgan" as "fearless and incorruptible," and noted that he had turned away numerous job offers from Wall Street. Pecora was determined to hang some pelts on his wall. Among those he bagged was Charles Mitchell, chairman of National City Bank of New York (ancestor of today's Citigroup), who was forced to resign after Pecora (and others) laid bare his financial manipulations.

Two key questions:  Will Angelides and the rest of the panel hire investigators smart enough to ferret out the modern-day Mitchells? And will the panel be willing to preside over a Pecora-style bloodletting?

-- Michael Hiltzik

Photo: Ferdinand Pecora on the cover of Time in 1933. Credit: Time Inc.

Comments

[Matt Lechner]

WHEN YOU ALLOW CORRUPTION IN THE STATE'S PENSION AND RETIREMENT SYSTEM CONTRACTING, AS DETAILED IN LECHNER V. CAPITAL GROUP (AMERICAN FUNDS) USCA 9TH; AND THE JUDGES MAKE A FARCE OF THE CASE BECAUSE "IN GENERAL" THEY DISLIKE FINANCE; IT IS NO WONDER THAT YOUR FINANCIAL INFRASTRUCTURE IS ROTTING AWAY.

FOR OPENERS, WHY DON'T YOU STOP ALLOWING COMPANIES LIKE CAPITAL GROUP / AMERICAN FUNDS TO USE DUMMY FRONT COMPANIES TO CIRCUMVENT THE BIDDING RULES IN STATE RETIREMENT SYSTEM VENDOR COMPETITIONS.

IF THE CITIZENS DON'T CARE, THEN THE LAWYERS WON'T CARE, AND THEN THE JUDGES COULD NOT CARE LESS. AND IF YOU ARE A WHISTLEBLOWER WHO REALLY CAN'T AFFORD A LAWYER, THE JUDGES TREAT YOU LIKE DIRT, AND THEY ENJOY DOING IT. NICE PEOPLE.

FROM NOW ON, I AM JUST GOING TO AVOID DOING BUSINESS WITH CALIFORNIA.

AFTER SEEING HOW CAPITAL GROUP / AMERICAN FUNDS DOES BUSINESS, AND HOW YOUR JUDGES JUST WIPED THEIR FEET ON THE MATTER - I WOULD NOT BUY A CALIFORNIA SECURITY IF MY LIFE DEPENDED ON IT.

AND WHEN SOMEONE TRIES TO GET JUSTICE WHO HAS BEEN STOMPED BY THE FRAUDULENT CONDUCT, THE JUDGES MAKE A FARCE OF IT. THAT IS YOUR WORLD THEY ARE CORRUPTING - THE CYNICAL CORRUPT JUDGES, LIKE JUDGE REAL AND THE APPEALS COURT ABOVE HIM. THEY DON'T CARE ABOUT ANYTHING - INCLUDING THE LAW ITSELF.

BY FEDERAL LAW, IF YOU FILE PAPERS IN A FEDERAL COURT HOUSE, THEY ARE DEEMED OFFICIALLY FILED AND ARE PROTECTED BY FEDERAL LAW. BUT NOT WITH JUDGE REAL. HE MAILS THEM BACK TO YOU. AND, IF YOU BRING IT TO THE ATTENTION OF THE APPEALS COURT, THEY COULD NOT CARE LESS. ALL I CAN SAY IS IT'S YOUR WORLD YOU ARE LETTING THEM RUIN. THEY GET PAID TO BE JUDGES, IT IS NOT SOME KIND OF HONORARIUM. THEY ARE SUPPOSED TO DO THEIR JOBS, AND THEY DON'T. NOT ONLY DO THEY NOT DO THEIR JOBS, THEY ENJOY CREATING A FARCE. OK - YOU MADE A FARCE OF CORRUPTION IN YOUR OWN STATE'S RETIREMENT SYSTEM.

ALL THE JUDGES CARE ABOUT IS IF THEY LOOK AMPLY REGAL IN THEIR BLACK ROBES. AS FOR DEALING WITH AN ACTUAL CASE - THEY COULD NOT CARE LESS. FRANKLY, I DON'T THINK THEY EVEN READ THE MATERIALS.

INCLUDING JUDGE REAL, AND THE VARIOUS APPEALS COURT JUDGES.

I WAS A FINANCE PROFESSOR FOR QUITE A WHILE, AND I CAN TELL IF PEOPLE HAVE READ THE MATERIALS - AND THEY DIDN'T.

JUDGE REAL DIDN'T READ THE MATERIALS, AND NEITHER DID THE APPEALS COURT PEOPLE.

SO, NOW YOUR STATE IS A LITTLE MORE CORRUPT.

AND YOU WONDER WHY YOUR FINANCIAL SYSTEM DOES NOT WORK ?

[Michael Snyder]

Matt, please stop shouting! It makes your post difficult to read.

As this current "recession" proves; "those who don't learn from history are doomed to repeat it." The Bush administration clearly either decided to ignore or failed to learn from the mistakes that led to the last great depression, I'm sure the tale leading up to this one will be rife with many of the same kinds of machinations that caused the first one. Granted, we have the internet & a few new flavors; but the $600 trillion in "derivatives" sitting out there are sucking the life's blood out of the world's economy.

Now I know if you're one of the "investor class" you may believe all of that hot air has value; but from my "cash" prospective here on Main St. those derivatives have only increased the cost of credit (thank you for the Credit Default Swap) and the unregulated opaque nature of "derivatives" keep the world's economy teetering on the brink of disaster.

Angelides will find malfeasance, and plenty of it. But will the miscreants be brought to justice? I doubt it.