Ferdinand Pecora turned a tame United States investigation of the 1929 Crash into an exposé that spawned far-reaching banking reform. Despite flashes of incisiveness from Chairman Phil Angelides, the Financial Crisis Inquiry Commission’s debut with Wall Street bosses Wednesday lacked that kind of promise. It’s early days, but the panel needs to sharpen up.
Mr. Angelides began on a high note, quizzing Goldman Sachs honcho Lloyd Blankfein about the firm’s dual role marketing financial products to customers and, elsewhere in the organization, at times selling the same products short. But Mr. Angelides didn’t have time to press his point, and the other commissioners mostly offered softer questions.
Jamie Dimon, John Mack and Brian Moynihan, respectively the bosses of JPMorgan, Morgan Stanley and Bank of America, took less flak – but that may be because they escaped questioning from Mr. Angelides, who concentrated on Mr. Blankfein.
Even Brooksley Born, famous for battling former Federal Reserve Chairman Alan Greenspan and other bigwigs over derivatives regulation, didn’t press the bank chief executives very hard.
Of course, this is just the beginning. Aside from looking at Goldman’s apparent conflicts, the American International Group rescue, derivatives trading, bank leverage, credit ratings and other potential financial sector causes of the crisis, the government’s role demands scrutiny, too. That includes not just regulatory failures but also policies that promote and subsidize home ownership – raised by Mr. Blankfein in his testimony – and the extremes of leverage allowed at government-linked mortgage giants Fannie Mae and Freddie Mac, an issue brought up by Mr. Dimon.
With all this ground to cover, there is time for Mr. Angelides’ panel to hit its stride. Back in the 1930s, it took the arrival of Mr. Pecora in 1933 – only as counsel to the Senate investigation, and its fourth one at that – to galvanize proceedings and earn his name’s association with the commission, which led to the Securities Act of 1933 and the Securities Exchange Act of 1934.
If Mr. Angelides wants his own name linked with similarly meaningful results this time around, he needs to knock his team into leaner, meaner shape.