Kudos to The New York Times edit page for dogging the poky progress of the Financial Crisis Inquiry Commission, the bipartisan, blue-ribbon panel that is supposed to look into the roots of the financial crisis, but is only now just getting off the ground with what the Times calls an “oddly inauspicious” opening session last week.
The session was limited to desultory opening statements; the commission just got around to naming an executive director; no public hearings are scheduled until December at the earliest, etc.
The final report won’t be done until a year from then—not that much time when you think about it, but it seems like forever. As we’ve said, there’s no way the public will be able to get its arms around a catastrophe the size of the financial crisis without somebody laying out the narrative in a systematic way. That’s why all eyes are, or should be, on the 10-member panel headed by former California Treasurer Phil Angelides (well-profiled upon his appointment last July by the L.A. Times‘s Michael Hiltzik.)
And that’s why Wall Street organs are suspicious of it.
We’ve faulted the business press, particularly its standard-bearer The Wall Street Journal, for getting caught in the weeds of the crisis and failing to stop, step back, and take in the sweep of it all. The tendency toward incrementalism, insiderism, and petty scoop-ism has only been exacerbated by Rupert Murdoch’s News Corp. and its unfortunate embrace of Anglo-Australian style journalism. But this is a pathology of the business press generally. How many stories, no matter how good, have we read of tense weekends at the Fed (subscription), and how few on why they were necessary in the first place? Thank goodness for the Center for Public Integrity. The MSM’s tunnel vision and ahistoricism has created a vacuum filled, after a fashion by Matt Taibbi, who struck a chord, I believe, not only for the over-the-top language of his anti-Goldman Sachs polemic but for looking at Goldman’s role, and Wall Street’s generally, in various shocks over time.
Historian Ron Chernow helped put a new financial truth and non-reconciliation commission on the public agenda last January with an important op-ed, also in the Times, by pointing to precedent, the Depression-era commission headed by Ferdinand Pecora, which explained the Crash of 1929 to the public through a series of riveting hearings that, among other things, called on important economic actors, including bankers, to testify.
By the time they ended in May 1934, [the hearings] had generated 12,000 printed pages of testimony, collected in several thick volumes. These documents have served generations of historians. Our national narrative of stock market mayhem in the 1920s is largely composed of characters and anecdotes gleaned from their pages.
As a bonus:
Pecora not only documented a litany of abuses, but also paved the way for remedial legislation. The Securities Act of 1933, the Glass-Steagall Act of 1933 and the Securities Exchange Act of 1934 — all addressed abuses exposed by Pecora.
As American Banker notes, the Angelides commission might become become more relevant as the Obama administration’s finance reform efforts continue to flounder. Let’s hope so.
Our take here is that systemic corruption of the lending industry, driven by Wall Street, played a big role, and a wildly underplayed one at that. Others think the government did it.
Whatever. Let’s find out.
Dean Starkman Dean Starkman runs The Audit, CJR’s business section, and is the author of The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.