This morning the Financial Crisis Inquiry Commission -- a blue-ribbon panel modeled equally on the famed Pecora Commission and the the 9/11 Commission -- had its first public hearing, essentially a chance for the committee members to introduce themselves to the public and the press that packed the hearing. Not much substance was provided, but here are a few quick takeaways:- Given the membership [PDF], I worried that the committee would be beset with partisan bickering and/or clashing ideologies, like the Congressional Oversight Panel. The COP, appointed by Congress to provide oversight of the bank rescues, is regularly undermined by dissents from Representative Jeb Hensarling, whose deeply conservative economic views preclude almost any reasonable discussion about regulation and finance. But though some tensions showed, I though the conservative New Pecora commissioners seemed open-minded; former Bush administration economic official Keith Hennessey and McCain economic adviser Douglas Holtz-Eakin made productive comments, though Peter Wallison, a more doctrinaire conservative than either of the other two, seemed to have his mind made up about the financial crisis, essentially blaming Fannie Mae and Freddie Mac right from the outset. He may be the poison pill on this committee. - Most surprising was Vice-Chairman Bill Thomas, a former Republican Congressman and Committee Chair. Thomas seemed to agree broadly with Chairman Phil Angelides goals of non-partisan fact-finding, and went out of his way to compliment the views of every member of the commission. He even singled out Commissioner Brooksley Born, who strongly advocated regulating derivatives during the Clinton administration, telling her that the crisis would have been much more manageable had her advice been acted on. Later, asked by a reporter if the issue of regulating markets would divide the committee, Thomas stepped forward to say that he thought regulatory reform was inevitable and that making it work correctly was critical. Though it is easy for him to say that now, Thomas' early impressions are much less doctrinaire than had been anticipated.- One concern: There is no liberal economist on the committee, while there are three conservative economic thinkers in Hennessey, Holtz-Eakin and Wallison. The Democratic appointees have regulatory, legal, political and private business experience, but no specific economic expertise. - Early in the week, the New Pecora Commission announced the appointment of Thomas Greene as its Executive Director. Greene, a lawyer, has done complex investigatory work both in Washington, D.C. and in California, coordinating anti-trust and securities investigations in a variety of venues. The appointment is critical; recall that the Pecora Commission was named after it's executive director, Ferdinand Pecora, not the members of congress who constituted the actual committee. And more talent is coming: As Greene hung around after the hearing, several different people, including several lawyers, approached him about working for the commission.The Committee will continue staffing up and opening offices in Washington through the end of October, and sending document retention letters to various government and private offices to ensure that they do not destroy key evidence of how the financial crisis proceeded. Their next step is to begin putting together a comprehensive timeline of the crisis and tackling the twenty two areas of inquiry [PDF] assigned to them by law, likely beginning with the housing bubble and sub-prime mortgages. Regarding concerns that their work would be irrelevant by the time they turn in their report in December 2010, they noted their intentions to release regular working documents and continue holding public hearings, the fact that regulatory reform, even if a major overhaul is passed early next year, will be a continuing process, and that future regulators will require a blueprint of the past crisis in order to avoid the next one.
-- Tim Fernholz
Further Reading: An interview with Phil Angelides, Chairman of the New Pecora Commission.
Photo: Ferdinand Pecora on the cover of Time Magazine.
