Robert Stein 1924-2014

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Friday, May 08, 2009

Morning-Aftering the Meltdown

Congress is pushing through a 9/11-like bipartisan commission to root through the ruins of the economy, discover what happened and figure out how to avoid another meltdown, and the White House has signaled its approval.

With Democrats and Republicans already arguing over how many members each will pick, it promises to be an exercise in finger-pointing unless the lead investigators are imbued with the zeal and bite of the Pecora Commission that unearthed the causes of the 1929 market crash.

Back then, the inquiry started as a Republican whitewash of Wall Street that ran through three tame lead counsels until a bulldog New York assistant DA named Ferdinand Pecora took over and started grilling elite bankers and brokers to lay bare Wall Street abuses, up to and including the fact that J.P. Morgan, Jr. and his partners had not paid any income taxes for two years.

The issues are much more complicated now, and the Meltdown Commission investigators will need not only the subpoena power to root out wrongdoing but the expertise to trace and dissect the complex derivative deals that caused today's mess, and the members will have to have the background to understand what they find.

Congress will undoubtedly round up the usual suspects such as James Baker and Lee Hamilton, but this one could use a couple of Nobel economists who are not uncritical fans of the Obama Recovery campaign. Paul Krugman and Joseph Stiglitz should be at the top of the list.


John said...

Michael Greenberger belongs at the top of that list, as well.

James H said...

I would put Spitzer in the Pecora role. Baker et. al. seem a bit too focused on proving their bipartisan and elder statesman bona fides by issuing reports that do nothing.