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It Was Supposed To Be Another Pecora Commission: What Went Wrong?

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TWO FINANCIAL INVESTIGATIONS: One Went after The Banksters, The Other Became A Forum For Bluster

By Danny Schechter

Director, Plunder, The Crime of Our Time

A Tale of Then and Now, FDR vs Obama: A Story of Shame, Co-optation, Partisan Bickering and Industry Lobbying To Undermine Financial Reform

2009, The Intent: Speaker Nancy Pelosi: "What I want to initiate is the equivalent of what happened in the 30's. They had something that was called the Pecora Commission. This was the commission that was formed when Franklin Roosevelt took office and they investigated what happened with the markets... We need to know. Some people can tell you one piece of it. Others can tell you another piece of it. But really it's very hard do you understand it? -- for the American people and the rest of us as we try to make policy as we go forward to see the ramifications of any of the changes we're being asked to make."

THEN: Robert Kuttner: In 1932 through 1934 the Senate Banking Committee, led by its Chief Counsel Ferdinand Pecora, ferreted out the deeper fraud and corruption that led to the Crash of 1929 and the Great Depression. The Pecora Committee's findings helped change the political mood, and laid the groundwork for the sweeping financial reforms of Roosevelt's New Deal. Roosevelt himself often conferred with Pecora, encouraged him, and depended on Pecora's work to build the public support for reform. He appointed Pecora to one of the newly created results of his handiwork, the Securities and Exchange Commission, though Pecora was disappointed not to be its chairman.

NOW: NY Times April 6 2010 Financial Crisis Inquiry Wrestles With Setbacks

WASHINGTON -- The panel established by Congress to investigate the causes of the financial crisis has been hobbled by delays and internal disagreements and a lack of focus, according to interviews with a majority of its members and government officials briefed on its work.

THEN: Wikipedia, "Following the Wall Street Crash, the U.S. economy had gone into a depression, and a large number of banks failed. The Pecora Investigation sought to uncover the causes of the financial collapse. As chief counsel, Ferdinand Pecora personally examined many high-profile witnesses, who included some of the nation's most influential bankers and stockbrokers. Among these witnesses were Richard Whitney, president of the New York Stock Exchange, investment bankers Otto H. Kahn, Charles E. Mitchell, Thomas W. Lamont, and Albert H. Wiggin, plus celebrated commodity market speculators such as Arthur W. Cutten. Given wide media coverage, the testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry after he admitted under examination that he and many of his partners had not paid any income taxes in 1931 and 1932."

NOW: NY TIMES, 2010: "In recent months, a top investigator resigned, frustrated by delays in assembling a staff. Behind closed doors the panel's chairman and vice chairman have had heated disagreements over whether to make public preliminary findings or revelatory documents. Entities like Citigroup and the Treasury have complained that the panel's requests for information have been vague and voluminous.

THEN: The Nation, The original commission was created during the Great Depression as a fact-finding enterprise, to figure out how things could have gone so wrong. The hearings attracted tremendous attention and their uncovering of the self-dealing and corruption on Wall St. laid the ground work for future regulatory reforms.

NOW: New York Times, The people appointed to the Financial Crisis Inquiry Commission last July, six by Democrats and four by Republicans, say they hope to publish, by the Dec. 15 deadline, a volume much like the 9/11 Commission report, which was acclaimed for its narrative sweep and became a surprise best seller. (DS: Understatement: That report raised more questions than it answered. Like the Warren Commisision on which it was modeled, many Americans believe it was a cover-up.)

But that goal seems increasingly out of reach, given what the commissioners themselves acknowledge has been a haphazard approach and a lack of time and resources. Given the delays, the commission's impact on policy could be modest; the House has already voted on a sweeping financial reform bill, and the Senate could vote on it by summer.

The commission has been set back not so much by partisan bickering but by the size of its task: examining and explaining a crisis whose complex and often technical causes continue to befuddle ordinary Americans."

THEN: Dr. Housing Bubble: Ferdinand Pecora was appointed Chief Counsel in the last months of the Hoover administration. The banking edifice of the United States was crumbling and even the house of Morgan (read The Lord of Money Speaks) was no longer strong enough to support the economy.

This is what a March 1933 issue of TIME had to say about Mr. Pecora:

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.

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I used to think Mr. Schecter was a bright guy, so ... by Samson on Friday, Apr 9, 2010 at 6:28:07 AM