Top of the News: The bi-partisan Financial Crisis Inquiry Commission began its hearings today into the causes of the great crash. It should be one of the most important enterprises of 2010.
Unfortunately, the commission lacks the funds and public focus that helped the 1930s Pecora Commission formulate the reforms that helped keep the American financial system sound for seven decades.
Another big difference: Wall Street was in ruins along with the rest of the country after 1929. Today Wall Street is richer than ever and can deploy hundreds of millions of dollars lobbying against reform. It helps that their behavior has been bailed out and backed by perhaps trillions in federal tax dollars and Fed obligations.
Still, these are hearings that deserve our attention. The big banks cooked up the risky, highly complex swindles that brought the economy to the edge of a new depression. Among them: Goldman Sachs selling rotten securities to clients and betting against them — thus profiting from their collapse.
Andrew Ross Sorkin of the New York Times had a good list of opening questions. So far, the executives are doing a lot of dancing, with a little bit of pseudo-apologizing.
The proof will be in legislation that emerges from the revelations of the panel. Or will this be another report that largely is ignored and shelved, a la the 9/11 commission? If so, get ready for the next crash. Heidi Moore is live-blogging the hearings for the WSJ here.
Today’s Econ Haiku:
In Pecora’s day
The bankers still owned a lot
But not Washington