The response to the financial crisis out of Washington has been such a disappointment, from blanket bailouts to funneling AIG’s counterparties 100 cents on the dollar to the so-called “stress tests,” that it’s hard to get too worked up about today’s Financial Crisis Inquiry Commission hearings (watch the hearing live here.) This Congressional panel is being sold as a modern-day Pecora Commission, the Depression Era inquiry that dug into the market crash and led to the creation of the SEC and the Glass-Steagall Act.
This morning the panel will hear from the heads of four big banks: Lloyd Blankfein, John Mack, Jamie Dimon and Brian Moynihan, the new CEO at BofA. It’s sure to produce the usual dog-and-pony show kind of fireworks Congressional panels are well know for. If there’s one thing Congress still does it, it’s play to the cameras.
The Journal is live-blogging the hearing, which is getting a little test already. Goldman’s Blankfein tried to compare the financial crisis to a hurricane, something the panel’s chairman, Phil Angelides, quickly shot down, saying hurricane’s are acts of God, whereas the financial crisis was created by men and women.
Without a doubt, we’d imagine the high point will be when panel-member Brooksley Born, who famously tried and failed to regulate derivatives in the ’90s as head of the CFTC, gets to ask a few questions.
The Commission is also soliciting questions from the public for the hearings, an unusual request to be sure. One of the panelists, Keith Hennessey, is soliciting questions on his website, and the commission itself has a homepage. The Times already collected the thoughts of a number of educated observers, who offer up their questions for the CEOs.
Here’s a pointed one from James Grant of Grant’s Interest Rate Observer:
“The Federal Reserve’s setting of its benchmark federal funds rate at nearly 1 percent in 2003 to 2004 was a primary cause of the housing and mortgage debacle. Yet, in an attempt to nurse the economy back to health, the Fed has set that rate at nearly zero percent. So what’s the next bubble, and how do you intend to profit by it?”
Good luck getting that one answered!