On Wednesday, Congressional leaders announced the membership of a new commission to investigate the roots of the financial crisis. It is modeled on the Pecora Commission, which investigated the 1929 Wall Street crash and led to much-needed reform, including the creation of the Securities and Exchange Commission. This afternoon, I spoke to the chair of the Commission, former California Treasurer Phil Angelides, about what he hopes to accomplish and concerns that the commision may be rendered ineffective by partisan quarrels. The entire interview (which is lightly edited) follows after the jump; here are a few interesting points to get you started.
The commission has the ability to subpoena information, but only if at least one of the Republican appointees supports the decision. Are you at all concerned about disagreement within the committee hurting its ability to gather information?
When the speaker and the majority leader asked me to serve as chair, [I knew] this would be a hard and difficult road. I'm starting on the assumption that other commissioners, like myself, are interested in getting to the facts and the root causes. If we have to issue subpoenas, I hope we can do that. Hopefully people [with information] will cooperate, but if not, we were given the tools to get the facts. I would want to start on the basis that no commissioner would want to deprive us of information to make a good judgment on behalf of the American people. The commission is interesting because it really focuses on the inquiry, rather than the policy and political implications. I think that gives us a better chance of coming up with a nonpartisan, bipartisan findings of facts.
Some people take a cynical attitude to blue ribbon commissions like this one, suggesting that they're a way for public officials to avoid their responsibilities. What do you expect to accomplish?
We start, obviously, with a great interest in finding the truth. Clearly there have been reports from blue ribbon commissions that sit on shelves that no one ever sees, but there have been important moments in this country where bipartisan, nonpartisan panels have risen to the occasion, people have set aside their bipartisan interest to render judgments and find facts that are politically important. The Pecora Commission is obviously one instance of that. In the wake of the 1929 crash, the work of that commission really shined the light of day on what brought the country to its economic knees. The 9/11 Commission, I believe, did an important service in highlighting the failures that made America vulnerable to a terrorist attack. The Kerner Commission in the 1960s was a very important moment in delineating the racial divide in this country.
Do you believe we already have a broad understanding of what led to this crisis, or do you feel there are a lot of questions still unanswered?
All of us come with our personal views. I'll start by saying that in the early part of this decade, as early as 2002, I was concerned about what was happening the marketplace. I was deeply concerned about executive compensation so I mobilized shareholders across the country to push back on executive compensation. I was concerned about lax enforcement at the SEC. ... I was part of a movement of activist shareholders in an effort to bring some common sense to the market place. In the wake of the Enron and Worldcom, we had some momentum, but the economy recovered and the regulators took their foot off the brakes. We all come in with our own viewpoints, but our job is to look at this fresh.
Check out the rest after the jump.
-- Tim Fernholz