Mark your calendars for April 7-9th. The next meeting of the Financial Crisis Inquiry Commission (FCIC) is going to make waves. Alan Greenspan, Citigroup execs, Fannie Mae execs and others will testify. Here's the full schedule:
DAY ONE –WEDNESDAY, APRIL 7
Session 1: The Federal Reserve
Mr. Alan Greenspan, former Chairman
Board of Governors of the Federal Reserve System
Session 2: Subprime Origination and Securitization
Mr. Richard Bitner, Managing Director of Housingwire.com,
Author, “Confessions of a Subprime Lender: An Insider’s Tale of Greed, Fraud & Ignorance”
Mr. Richard Bowen, former Senior Vice President and Business Chief Underwriter
Ms. Patricia Lindsay, former Vice President, Corporate Risk
New Century Financial Corporation
Ms. Susan Mills, Managing Director of Mortgage Finance
Citi Markets & Banking, Global Securitized Markets
Session 3: Citigroup Subprime-Related Structured Products and Risk Management
Mr. Murray C. Barnes, former Managing Director, Independent Risk
Mr. David C. Bushnell, former Chief Risk Officer
Mr. Nestor Dominguez, former Co-Head, Global Collateralized Debt Obligations
Citi Markets & Banking, Global Structured Credit Products
Mr. Thomas G. Maheras, former Co-Chief Executive Officer
Citi Markets & Banking
DAY TWO – THURSDAY, APRIL 8
Session 1: Citigroup Senior Management
Mr. Chuck Prince, former Chairman of the Board and Chief Executive Officer
Mr. Robert Rubin, former Chairman of the Executive Committee of the Board of Directors
Session 2: Office of the Comptroller of the Currency
Mr. John C. Dugan, Comptroller
Office of the Comptroller of the Currency
Mr. John D. Hawke Jr., former Comptroller
Office of the Comptroller of the Currency
DAY THREE – FRIDAY, APRIL 9
Session 1: Fannie Mae
Mr. Robert J. Levin, former Executive Vice President and Chief Business Officer
Mr. Daniel H. Mudd, former President and Chief Executive Officer
Session 2: Office of the Federal Housing Enterprise Oversight
Mr. Armando Falcon Jr., former Director
Office of the Federal Housing Enterprise Oversight
Mr. James Lockhart, former Director
Office of the Federal Housing Enterprise Oversight
Now, it's up to the FCIC members to ask the tough questions.
Republicans are stepping up their campaign to win donations from Wall Street, trying to capitalize on an increasing sense of regret among executives at big financial institutions for backing Democrats in 2008.
In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.
Republicans may talk the right talk, but, in the back rooms, they're making corrupt bargains with the Wall Street banksters. The American people deserve to know the truth.
Today, Americans for Financial Reform called on Congress to support a bill that will put more financial cops on the beat to crack down on white collar crooks.
The bill, entitled the “Financial Crisis of 2008 Criminal Investigation and Prosecution Act of 2009” is sponsored Congresswoman Marcy Kaptur (D-OH). The bill is directed at giving the Department of Justice, the Federal Bureau of Investigation and the Securities and Exchange Commission the resources they need to fight financial crime and bring successful prosecutions. Among other things, the bill authorizes the Director of the FBI to hire 1,000 more agents and additional forensic experts.
Heather Booth of the AFR makes the case for this legislation:
In the eighteen months since fraudulent and corrupt business practices, in the mortgage area and on Wall Street, collapsed the economy – costing taxpayers millions of jobs and trillions in lost wealth and savings – it is the brashness of the impropriety and deceit that is so appalling. We must make real systems changes and hold those accountable who created the problem.
Accountable America's own Tom Matzzie also strongly supports putting more financial cops on the beat.
Recent revelations about Lehman Brothers show that accounting fraud was at the heart of the Wall Street meltdown with staggering consequences for the global economy. But where are the indictments? Where is the follow up? The FBI needs to get cracking.
Below is a letter the groups sent to Congress today:
The Honorable Marcy Kaptur
United States House of Representatives
Washington, DC 20515
March 31, 2010
Dear Representative Kaptur:
We are writing in support of H.R. 3995, the “Financial Crisis of 2008 Criminal Investigation and Prosecution Act of 2009,” authored by Representative Marcy Kaptur.
In the eighteen months since fraudulent and corrupt business practices in the mortgage area and on Wall Street collapsed the economy – costing taxpayers trillions in lost wealth and savings – it is difficult to point to any successful prosecutions of major players in this debacle. Compare this to what happened after the Savings and Loan (S&L) crisis of 20 years ago. According to Department of Justice (DOJ) statistics, no less than 1,852 S&L officials were prosecuted and 1,072 were jailed. Over 500 of these were top officers.
Why the difference? In the wake of the S&L crisis, Congress pushed regulators to investigate and prosecute. Congress also provided significant new resources to this end. A series of strike forces based in 27 cities was staffed with 1,000 FBI agents and forensic experts and dozens of federal prosecutors. Given the size and sophistication of the institutions now involved, even more resources will be needed to give prosecutors a fighting chance.
The “Financial Crisis of 2008 Criminal Investigation and Prosecution Act of 2009” authorizes the Director of the FBI to hire 1,000 more agents and additional forensic experts. The bill also authorizes the DOJ and the Securities and Exchange Commission to hire additional investigators and prosecutors to step up the pace of criminal and civil prosecutions.
Without these additional resources, it is highly unlikely that sufficient criminal prosecutions will be undertaken to deter the next corporate crime wave. Worse, the American people who have lost so much during this crisis will be bereft of the justice they deserve.
We urge your support of this important measure.
Americans for Financial Reform
This is a good sign. According to a report on a law firm website the Financial Crisis Inquiry Commission has started issuing subpoenas. No word yet on whether they will subpoena former Bush regulators like SEC Chairman Christopher Cox.
The Financial Crisis Inquiry Commission (FCIC or Commission), which was created by Congress in 2009 to investigate the causes of the domestic and global economic crisis, has begun issuing far-reaching document subpoenas to financial institutions. Requests for testimony from individual current and former officers of those institutions likely will follow.
Let's hope that the FCIC is finally going to play hardball with those whose actions contributed to the worst financial crisis since the Great Depression.
Wall Street knows that it has a problem. They think it's a PR problem. It's not. It's the fact that they have a problem and they refuse to admit it. Here's what the out of touch banksters think is the solution:
One of Wall Street’s main lobbying groups is starting an image-improvement campaign aimed at showing the financial industry as trustworthy and a positive force after more than a year of being chastised in Washington.
The board of the Financial Services Roundtable, which represents the 150 largest banks and insurance companies in the U.S., discussed the effort last week at a meeting in New York. The public relations campaign, which will come to fruition as the mid-term election season heats up, is being led by three firms: public relations specialists APCO Worldwide, pollster Luntz Maslansky Strategic Research and DDB, an advertising agency owned by New York-based Omnicom Group Inc.
Not even Frank Luntz's magical words can save Wall Street from it's PR problem. The American people can see beyond the spin. They know that there's rot at the core of Wall Street and we need reform.
Yes we did.
With the landmark healthcare legislation closer to his desk than ever, President Barack Obama is turning his attention to comprehensive financial regulatory reform. The Hill:
President Barack Obama on Saturday slammed “the army of lobbyists” working against congressional reforms to the financial rules governing Wall Street.
In his weekly address, Obama focused solely on the need for financial reform, just as the House of Representatives prepared to cast a vote on the president’s hallmark effort: healthcare reform.
Obama, who has been hard at work convincing Democrats to vote in favor of healthcare reform, did not make any mention of the crucial Sunday vote in his address to the nation.
Instead, he focused on the need for financial reform and zoomed in on the creation of a consumer protection agency at the Federal Reserve to prevent predatory lending. Obama also took a swipe at Republicans for seeking to thwart the financial system overhaul in exchange for campaign contributions from the largest U.S. banks and their executives.
Obama decried the multi-million dollar campaign launched against the reform efforts. The Chamber of Commerce recently launched a $3 million campaign against efforts to set up a new consumer financial protection office. The Chamber has long campaigned against a standalone Consumer Financial Protection Agency as originally proposed by Obama and passed by the House in December.
“For these banking reforms to be complete – for these reforms to meet the measure of the crisis we’ve just been through – we need a consumer agency to advocate for ordinary Americans and help enforce the rules that protect them,” Obama said in his address Saturday.
The Senate Banking Committee is beginning debate on Financial Regulatory Reform. It's time to step up the pressure on the committee members:
Christopher J. Dodd Chairman (D-CT)
Richard C. Shelby Ranking Member (R-AL)
Tim Johnson (D-SD)
Robert F. Bennett (R-UT)
Jack Reed (D-RI)
Jim Bunning (R-KY)
Charles E. Schumer (D-NY)
Mike Crapo (R-ID)
Evan Bayh (D-IN)
Bob Corker (R-TN)
Robert Menendez (D-NJ)
Jim DeMint (R-SC)
Daniel K. Akaka (D-HI)
David Vitter (R-LA)
Sherrod Brown (D-OH)
Mike Johanns (R-NE)
Jon Tester (D-MT)
Kay Bailey Hutchison (R-TX)
Herb Kohl (D-WI)
Judd Gregg (R-NH)
Mark Warner (D-VA)
Jeff Merkley (D-OR)
Michael Bennet (D-CO)
Call these members at 202-224-3121 and encourage them to pass real financial regulatory reform with and independent Consumer Financial Regulatory Agency.
David Frum, former speech writer to George W. Bush, said that in the healthcare debate, the Republican Party chose to "the most radical voices in the party." Watch:
The Republican Party not only chose to listen to it's most radical voices, it's captive to them. The Republican Party rejected moderation and compromise in favor of a hard right, obstruct at all costs agenda advanced by their radical wing. Frum:
I’ve been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes it mobilizes supporters – but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead. The real leaders are on TV and radio, and they have very different imperatives from people in government. Talk radio thrives on confrontation and recrimination. When Rush Limbaugh said that he wanted President Obama to fail, he was intelligently explaining his own interests. What he omitted to say – but what is equally true – is that he also wants Republicans to fail. If Republicans succeed – if they govern successfully in office and negotiate attractive compromises out of office – Rush’s listeners get less angry. And if they are less angry, they listen to the radio less, and hear fewer ads for Sleepnumber beds.
Frum acknowledges that much of the right wing critique against healthcare was chock full of inaccuracies, innuendo and outright fearmongering. The Republicans chose their radical path. And, it led to their Waterloo.
The ugly underbelly of knee-jerk, right wing hate reared it's ugly head yesterday. Voice of America reports:
Two African American congressmen, Andre Carson of Indiana and John Lewis from Georgia, were subjected to racial epithets from protesters as they left the Capitol after hearing President Barack Obama deliver a last-minute address promoting the health care bill.
Congressman James Clyburn of South Carolina, who is the highest-ranking African American official in Congress, told The Washington Post that he heard things from Saturday's demonstrators that he had not heard "since March 15, 1960" when he was - as he put it - "marching to get off the back of the bus."
Another black congressman, Emanuel Cleaver of Missouri, said he was spat on by protesters.
Barney Frank, a congressman from Massachusetts who is openly homosexual, was badgered with anti-gay remarks from the demonstrators.
A spokesman for Cleaver said the congressman is "disappointed that in the 21st century (the) national discourse has devolved to the point of name-calling and spitting."
Beyond the hate, there is much misunderstanding out there about this health care bill and what it means for you. For example, according to the new Kaiser Health Tracking Poll, "only 15% of Americans, for instance, know that the nonpartisan Congressional Budget Office has said the legislation will decrease the federal budget deficit over the next 10 years. And 55% believe the CBO has said the legislation will increase the deficit over that period."
There's an urgent need in this country to reform the healthcare system. The existing system is costly and discriminatory. We can't wait. Get the facts and then, call your member of Congress (202-224-3121) to urge passage of healthcare reform.
Let's make history.
...doing the same thing over and over again and expecting different results. The latest failure:
Securities and Exchange Commission Chairman Mary Schapiro said her agency’s oversight of Lehman Brothers Holdings Inc. was “terribly flawed,” days after a bankruptcy examiner found the SEC didn’t try to stop the firm’s exaggeration of liquid assets.
“It was so terribly flawed in design and execution,” Schapiro testified to a Congressional committee today, referring to SEC examinations aimed at monitoring the soundness of Wall Street’s biggest investment banks. “We were ill-suited because of our enforcement and disclosure mentality.”
Eighteen months after Lehman’s collapse, the 2,200-page report by Anton Valukas has reignited the debate over what regulators should have known and done before Lehman’s collapse triggered a global financial crisis. The House Financial Services Committee said today it will hold a hearing so that lawmakers can question U.S. watchdogs at the time.
Our current regulatory structures are failing the American people, yet, Wall Street is arguing for more of the same. That's ridiculous. We need real change in our regulatory environment, and, we need that change now.
An untold story in the Lehman saga is the role that George W. Bush's SEC Chairman Christopher Cox played. Did he and his Bush Administration cronies look the other way as Wall Street helped usher in the greatest financial crisis since the Great Depression?
“Either the SEC and the New York Federal Reserve failed to discover the ongoing accounting fraud at Lehman, or they turned a blind eye,” said Representative Spencer Bachus, an Alabama Republican on the House panel. “In either case, the actions of these two regulators represent a grave failure and should be explored at a public hearing.”
Bachus wants to summon former SEC Chairman Christopher Cox, then-Lehman Chief Executive Officer Richard Fuld and ex-New York Fed President Timothy F. Geithner, who is now U.S. Treasury Secretary. Schapiro, Cox’s successor, took her post in January 2009...
A week after Lehman’s collapse, Cox told Congress that no law authorized the voluntary program to prescribe a companywide liquidity level or enforce SEC leverage requirements. The SEC announced Sept. 26, 2008, the program was ending.
Valukas didn’t draw conclusions in the report about whether the SEC’s interactions with Lehman were appropriate. The SEC allows firms to determine how they disclose liquid assets, so long as they don’t deceive investors. Schapiro has replaced most of the agency’s top officials.
America deserves answers from Christopher Cox and his boss, George W. Bush. It's time for the Financial Crisis Inquiry Commission to look into the role that the previous Administration played in contributing to the financial crisis.
How wrong could they be? Americans for Financial Reform lays to waste some promises made by the chief banking lobby in Washington, The American Bankers Association:
ABA’s Account: The subprime mortgage market collapse does “not warrant a fundamental overhaul of the basic regulatory structure. Banking regulators... have since responded in a coordinated and measured way to preserve both confidence and liquidity in the banking system.” – American Bankers Association President Ed Yingling, November 20, 2007
How wrong could they be: Mass foreclosures will continue until 2013.
Washington, DC – As the American Bankers Association swarms Capitol Hill this week in yet another attempt to avoid accountability for the financial crisis, Americans for Financial Reform is asking Members of Congress to consider what past statements from the groups’ president Ed Yingling reveal about how he has fundamentally misunderstood the role the big banks he represents have played in this financial crisis.
Heather Booth, Executive Director, Americans for Financial Reform: “Why would you even entertain advice from an Association who represents those who created this financial crisis and is led by someone who has – time and time again – been fundamentally wrong about the how unchecked greed made possible by lack of regulation has led to the near collapse of the banks he represents? The American Bankers Association can continue to profess they have all the answers in solving our economic woes, but the record speaks for itself. We need real financial reform that will crack down on greedy and abusive behavior by banks to prevent another financial crisis. Clearly, because it might cut into their million dollar paydays, that’s not going to be the talking points for those ABA members on the Hill this week.”
FLASHBACK: ABA’s Account vs. Reality
ABA’s Account: In April 26, 2007, ABA President Ed Yingling, commenting on why there’s no need to reform credit card companies practices, said, “…the highly competitive nature of the [credit] card market puts consumers in the driver's seat. For example, we have seen that features that are unpopular with consumers often are competed away.”
How wrong could they be: As the public knows all too well, the credit companies continue with outrageous fees, stopping only where specifically prohibited by law, like the CARD Act that Congress that went into effect last month.
ABA’s Account: On September 27, 2006, when discussing expanding accountability of big banks ABA President Ed Yingling said, “Congress [should] permit the regulators to continue doing what they do best, namely, rigorously apply safety and soundness principles in an environment that permits banks to grow and serve their communities.”
How wrong could they be: The banks reckless behavior and the regulators’ failure to act caused the largest financial collapse since the Great Depression.
Where do you stand? With the banksters who oppose financial regulatory reform to protect their profits? Or, with people committed to putting responsible policies in place to protect Main Street against Wall Street's excesses?
The Lehman rabbit hole is getting deeper and deeper. And, it's raising questions about the practices of other troubled entities, like AIG. Eliot Spitzer and William K. Black write:
In December, we argued the urgent need to make public A.I.G.'s emails and "key internal accounting documents and financial models." A.I.G.'s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.
The damning 2,200-page report, released last Friday, examines the reasons behind Lehman's failure in September 2008. It reveals on and off balance-sheet accounting practices the firm's managers used to deceive the public about Lehman's true financial condition. Our investigations have shown for years that accounting is the "weapon of choice" for financial deception. Valukas's findings reveal how Lehman used $50 billion in "repo" loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, "Make Markets Be Markets," such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises.
The rabbit hole gets deeper:
The Valukas report also exposes the dysfunctional relationship between the country's main regulatory bodies and the systemically dangerous institutions (SDIs) they are supposed to be policing. The NY Fed, the regulatory agency led by then FRBNY President Geithner, has a clear statutory mission to promote the safety and soundness of the banking system and compliance with the law. Yet it stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a "three card monte routine" (p. 1470).
Spitzer and Black are calling for a Congressional investigation into the report.
We believe that the Valukas report cries out for an immediate Congressional investigation. As we did with A.I.G., we demand the release of the e-mails and internal documents from the New York Fed and Lehman executives that pertain to analyses of Lehman's financial soundness. What downside can there possibly be in making these records available for public analysis and scrutiny?
Three years since the collapse of the secondary market in toxic mortgage product, we have yet to see significant prosecutions of the kind of fraud exposed in the Valukas report. The SDIs, with Bernanke's open support, exorted the accounting standards board (FASB) to change the rules so that banks no longer need to recognize their losses. This has made the SDIs appear profitable and allows them to pay their executives massive, unearned bonuses based on fictional profits.
It's time to get to the bottom of the Lehman affair and put policies into place that will ensure that these kind of swindles don't happen again.
Surprise, surprise. Wall Street is throwing it's weight around in opposition to financial regulatory reform. Three front groups representing the fat cats are letting decision makers on Capitol Hill know that they are displeased.
According to the Capitol Hill publication, Roll Call, three of these front groups, the Financial Services Roundtable, the American Insurance Association and the National Association of Federal Credit Unions have issued strong statements against reform.
They've drawn the battle lines. On the one side, is the American people who stand to benefit from reforms that protect Main Street. And, on the other side are the Wall Street banksters who brought our economy to it's knees and have, remarkably, continued with business as usual since the collapse. Which side are you on?
The New York Times is equating Lehman Brothers with Enron:
The bankruptcy examiner’s report filed by Anton R. Valukas on the 2008 demise of Lehman Brothers discusses some accounting gimmicks that are eerily reminiscent of how Enron tried to prop up its balance sheet back in 2001 before it collapsed.
Both companies appear to have played right along the edge of properly accounting for transactions designed to make them appear much stronger than they turned out to be, becoming steadily more aggressive as they teetered on the brink of ruin.
How many other Wall Street banksters and corporate con men are using shady accounting practices to protect their house of cards? Time will tell.
The incredibly important work of the Financial Crisis Inquiry Commission continues from April 7 - 9th in Washington DC. The FCIC is charged with determining the root causes of the global financial meltdown. A similar commission set up during the Great Depression revealed major abuses in the financial system and helped usher in reform.
The April FCIC meeting is titled Subprime Lending and Securitization and Government-Sponsored Enterprises (GSEs). There will be hearings on the following entities: the Board of Governors of the Federal Reserve System, Citigroup, Fannie Mae, the Federal Housing Finance Agency (FHFA) and its predecessors the Federal Housing Finance Board (FHFB) and the Office of Federal Housing Enterprise Oversight (OFHEO), and the Office of the Comptroller of the Currency (OCC).
Stay tuned for more information about the next FCIC meeting as it becomes available.
Gary Gensler cut deals with Goldman Sachs for 18 years. Now, he's leading the charge for regulatory reform. The New York Times explains:
The proposals championed by Mr. Gensler, if adopted by Congress, would substantially alter what is now a largely unregulated market in over-the-counter derivatives, financial instruments used by companies and investors to protect themselves and bet on moves in variables, like interest rates or currencies, and to speculate.
The proposals include forcing the big banks that sell derivatives to conduct their trades in the open on public exchanges and clear them through central clearinghouses, so that any investor can see the prices that dealers charge their customers. Today, those transactions are bilateral and private.
The banks and their customers might have to post collateral or guarantees to prevent the kinds of panics seen during the financial crisis, in which some investors worried that trading partners might have trouble keeping their side of the contract.
In this way, the clearinghouses would work as circuit breakers in the great web of derivatives trading encircling the globe. Shifting the products, and the risk of default, off the books of the banks and onto these middlemen would ensure that no single bank was too interconnected to fail, the rationale goes.
The banks, for their part, sense a threat to the billions of dollars in profits they earn each year from trading in these complex derivatives.
Many don't understand these complex financial instruments, but, they need reform. They've helped to turn Wall Street into one giant, rigged casino that is designed so that Wall Street firms win, regardless of whether the economy grows or tanks. The Times continues:
Mr. Gensler’s conversion would seem to put him at odds with his mentors, like Robert E. Rubin, the former Treasury secretary, and with his former colleagues on Wall Street.
“Wall Street’s interest is not always the same as the public’s interest,” he says now. “Wall Street thrives and makes money in inefficient markets, and I am creating efficiencies in the market...”
“I disagree with anyone who says derivatives did not play a part in the crisis,” he said in defense of more oversight. He added: “Like San Francisco after the earthquake, we had a calamity, and now we need building codes.”
Regulatory reforms create efficient markets that champion economic growth and protect Main Street interests. Now is our chance to pass it.
It's happening. The teeth are being slowly pulled out of the Consumer Financial Protection Agency. The LA Times explains:
The move this week to downgrade a proposed Consumer Financial Protection Agency to lure bipartisan support instead appears to be undermining the Obama administration's effort to overhaul the nation's regulation of the entire industry.
The overhaul, aimed at preventing a repeat of the economic meltdown that helped send the nation and world markets into a deep recession, now might be moving closer to the junk heap of congressional bills than to a significant new law.
Creating a powerful and independent consumer agency, which is strongly opposed by the financial industry and Republicans, has been the major roadblock in drafting a bill that could pass in the Senate. Desperate to surmount that hurdle as this year's legislative clock winds down, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) floated the idea this week of putting the new agency in the Federal Reserve.
Although the move would gain some Republican support, it has led to howls of protests from many Democrats and consumer advocates that threaten to derail any compromise. And for good reason.
America is suffering from the worst financial crisis since the Great Depression. We let the banksters call the shots and they did - to the tune of record profits for them and a lack of jobs and opportunity for us. Now, they're trying to strip the teeth out of an organization that will protect us from their excesses. The LA Times continues:
Rep. Brad Sherman (D-Sherman Oaks), another supporter, said Wednesday that many House Democrats were unlikely to agree to give the Fed more consumer authority.
"It's somewhere between bad and terrible," Sherman said of the proposal. "For a number of my colleagues . . . that might just kill it."
Dodd's proposal might not even get through his own committee, potentially adding further delay in a mid-term election year in which major legislation is unlikely to get through Congress if not finished by the summer.
Sen. Jack Reed (D-R.I.) said he and some colleagues on the Banking Committee would try to amend the legislation to add a stand-alone consumer agency outside the Fed or any other banking regulatory body.
"There's quite a bit of disappointment with the Fed," Reed said Wednesday. "I think the best approach is an independent entity."
The banksters and their obstructionist friends are at it again. It's time for us to pressure our Senators to look out for Main Street, not Wall Street.
Accountable America Chairman Tom Matzzie submitted the following must read piece to the Huffington Post today. It outlines Accountable America's call for a stronger, more effective and more active Financial Crisis Inquiry Commission (FCIC):
Have you heard of the Financial Crisis Inquiry Commission? If not, that's because this Commission with responsibility for investigating the financial crisis has so far failed to get to work. Last May Congress passed legislation creating the Commission with a broad mandate and specific powers including subpoena, public hearings, cross examination of witnesses under oath and even criminal referrals.
Where are the hearings? Where are the subpoenas? Where are the criminal referrals? Millions of people are out of work because of the casino economy setup by some in the financial sector.
So far, the Financial Crisis Inquiry Commission isn't living up to expectations. It has been eighteen months since the market crashes, fifteen month since the Madoff frauds were exposed, nearly ten months since Congress created the Commission and eight months since commissioners were appointed.
To date the Commission has held one public hearing with witnesses and then a forum recently with professors and academicians. No victims have had a chance to talk. No subpoenas have been issued. There is no real way for the public to give input.
With one in six Americans looking for work, the Commission can't be allowed to whitewash the failure and complicity of the SEC and other government regulators. The Commission needs to assign blame where blame is due, and bring the wrongdoers to justice.
It didn't have to be this way. The hopes for the Commission harkened back to the Pecora Commission of the 1930s whose findings led to passage of Glass-Steagall, the Securities Act of 1933 and the Securities Exchange Act of 1934. Others were thinking of the role the 9/11 Commission played in pulling together a scrupulous accounting of the terrorist attack.
The victims of the hit and run economic crimes of this period expect and deserve much more. Years from now, there will be ample time for a leisurely stroll through the history of this crisis. Now is the time for action--investigations, prosecutions and more.
That's why a group I lead as Chairman, Accountable America, is working with victims of the Bernard Madoff frauds and others to push for investigation with teeth. Accountable America is sponsoring TV, radio and print ads, and organizing phone banks and public events.
Many Madoff victims see the lackluster government response so far as yet another form of financial abuse. One indirect Madoff investor, Suzanne Webel, who lost her life savings, said:
"We were robbed first by Madoff...and now by the government for failing to respond to our plight. We want the Financial Crisis Inquiry Commission to get to the bottom of this mess - we want a hearing on our issues and a commitment to compensate ALL victims fairly."
Accountable America sent a letter to Commission Chairman Phil Angelides and Vice-Chairman Bill Thomas, urging them to get serious about achieving their mandate. The letter aired several concerns:
* The Commission has made no commitment to hearing from the victims of Madoff frauds, other failed institutions or the broader financial crisis - despite a specific Congressional mandate to investigate these frauds. Victims deserve a full airing of their concerns.
* The Commission has not issued a single subpoena for current or former regulators who were either asleep at the switch or complicit in the financial crisis. Among many others, former S.E.C. Chairman Christopher Cox, Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan should all be subpoenaed and cross-examined.
* Testimony from academic experts is not enough. Too much time has been spent preparing for academic study instead of conducting investigations - which are the true intent of the Commission's Congressional mandate.
* The schedule and pace of work is too slow. Since July 2009, the Commission has only met in public three times. The first hearing with witnesses occurred just a month ago. If specific members of the Commission are dragging their feet or unwilling to work at an appropriate pace, they should be called to account publicly.
* The American people deserve clearer notice of the date, time and place of the Commission's meetings. The time of day for the most recent forum was announced only two days before it was held, and its location had inadequate space for the public. The Commission should announce a draft schedule of hearings with dates and locations for the rest of the year and ask for public input.
* Not a single subpoena has been issued. This is one of the Commission's most powerful tools, and it should not be left unused.
* If the reason for inaction is lack of resources, the Commission should publicly ask for what they need. Their work is too important to fall victim to indolence or red tape.
With the Commission's report due in December, there is still time to get on track -- but the clock is ticking.
Reflecting on his work in 1939, Ferdinand Pecora wrote:
Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker's stoutest allies.
Pecora's singular focus on truth-finding did justice to victims and safeguarded America's economy for decades to come.
Chairman Angelides and the other nine members of the Financial Crisis Inquiry Commission have a choice to make.
They can continue to conduct a toothless, academic exercise that holds no one accountable.
Or they can learn the lessons of the past and bring the disinfecting power of sunlight to the shadowy corners of our financial system where greed lies in wait to strike again.
The clock is ticking. It's time for action.
Today, U.S. Judge Burton Lifland ruled that a proposed "money-in, money-out" formula to determine claims for the thousands hurt by Bernie Madoff's Ponzi scheme. The ruling means, according to Reuters, that "investors' claims should be based on how much money they put into the firm minus how much they took out over the years."
The ruling is expected to be appealed, but it highlights the confusing nature of our protection laws. Tom pointed this pointed in the aforementioned Reuters article:
"The court's ruling underscores how weak and confusing our investor protection laws are today," said Tom Matzzie, president of Accountable America, a group pressing for deeper reform in the financial industry. "Very little has changed from before the Madoff frauds until today."