Michael Hiltzik: Angelides vs. Pecora

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The question of why the Angelides Commission, which just released its report on the financial meltdown of 2007-08 and is the subject of my Sunday column, doesn’t resemble the groundbreaking 1933 Pecora investigation into the 1929 crash is one of those rhetorical questions masquerading as a serious inquiry, like ‘How deep is the ocean?’ (Irving Berlin, 1932) or ‘Why can’t the English teach their children how to speak?’ (Lerner & Loewe, 1956).

There are several ways to answer the question, all involving a history lesson. One complaint is that the Angelides Commission, composed of six Democrats and four Republicans, was excessively partisan, unlike the Pecora inquiry.

The problem with this complaint is that Ferdinand Pecora’s investigation was the furthest thing from nonpartisan. It comprised a series of hearings of the Senate Banking Committee, which was led by a Democratic majority. Pecora was the Democrats’ handpicked general counsel. His hearings were designed to improve upon a timid investigation launched in 1932 by the then-GOP majority, which gave way to the Democrats in the election that year.

In any event, times are different. Pecora’s hearings introduced to the American public virtually for the first time a business milieu and a cast of characters, many of them rogues and manipulators, that most people were unaware of.


Almost every disclosure was fresh, because most people had never heard of Charlie Mitchell (the ethics-free head of the precursor of Citigroup) or JP Morgan Jr. Even after the hearings, the most that many Americans knew about ‘Jack’ Morgan was that during his appearance before the committee he had had his photograph taken with a Ringling Bros. circus midget sitting on his lap (the product of a PR man’s brainstorm).

Today, the names and faces of Wall Street’s leaders are familiar nationwide. They go on CNBC, they’ve been interviewed by Larry King, they get profiled in glossy magazines. Their business, moreover, is subject to extensive public disclosures that are assiduously mined by journalists and analysts--the result of Wall Street reforms inspired, indeed, by Pecora’s work. (He went on to become one of the first commissioners of the new Securities and Exchange Commission in 1934.)

Unearthing startling new facts about the recent financial crisis was not in the cards for the new panel. That said, its extensive report--including its minority dissent--is a valuable chronicle of the worst financial meltdown in most of our lifetimes. The commissioners deserve to take their place right next to Ferdinand Pecora.

The column starts below.

The public reaction to major man-made disasters always follows the same life cycle: First come shock and outrage, then demands for investigation and retribution against the guilty, and finally resignation about God’s mysterious ways, fatigue and ennui.

It may be the sad fate of the Financial Crisis Inquiry Commission to have issued its report on the recent economic disaster after popular sentiment had already reached that final stage. The commission, made up of six Democrats and four Republicans and chaired by former California Treasurer Phil Angelides, released its 633-page report on Jan. 27 to what amounted to a resounding public yawn.

That’s a shame, because it’s an invaluable chronicle of the worst global financial collapse since the 1930s. That doesn’t mean it’s perfect. As some critics have pointed out, the report isn’t as rigorously documented as it could be; it’s light on earthshaking disclosures, which are the red meat of any public inquiry; and it fails to make specific recommendations. This last isn’t the panel’s fault, as its founding directive from Congress forbade it from making specific recommendations.

Read the whole column.

--Michael Hiltzik