To Effect Change Demand Answers - - Bring Back "The Pecora Commission"

Roosevelt historian David Woolner shines a light on today's issues with lessons from the past.

After trillions of dollars in losses on Wall Street, massive bailouts, the collapse of the American auto industry, rising unemployment and a mortgage foreclosure crisis not seen since the Great Depression, it hardly seems surprising that the American people want answers. They want to know why we find ourselves in this mess. They want to know how this crisis happened. They want to know which institutions and practices were to blame. They understand that the severe downturn in the real economy on Main Street is directly linked to the meltdown in the banking and financial sector on Wall Street. They are not fools. They want answers and they want real change, and their patience for equivocation is wearing thin.

Just over three quarters of a century ago, the mood in the country was not much different. The people wanted to know what caused the great crash on Wall Street; what brought on the Great Depression; why the banking system had collapsed; why they were out of a job; and most of all, how could we be sure this would never happen again.

To find the answers to these questions, Congress launched a formal inquiry under the direction of the Senate Committee on Banking and Currency. The hearings began on March 4, 1932, and by the time FDR assumed office one year to the day after the hearing began, they were widely known as "The Pecora Commission," thanks to the relentless energy and zeal of the committee's chief counsel, Ferdinand Pecora.

You can read the rest of Roosevelt Historian David Woolner's piece at New Deal 2.0.

Comments

[DiogenesOfAlaska]

What I find most interesting is that the article says that a main argument of the banking establishment in the 1930s against the commission was that reform could undermine the recovery.

Sure rings a bell.

It's probably also the origin of the myth that Keynesianism was always doomed to failure and made everything worse.

Well, it's not the 1930s and it surely is quite something else today. But that doesn't mean one should neglect any efforts to clean the slate, in terms of what history does have on offer. And I would certainly prefer to trace back latter-day myths about the nature of banking to a re-enactment of the 1930s. Actually, I have no need at all for re-enactments of the 1930s, no matter what.

[Henry]

There is no official comnission necessary. Sen Phil Gramm and Fed Res Chairman Al Greenspan need only be taken for one quick weekend trip to Gitmo with successive waterboardings for truth. We do not need any of the free market gibberish, we'd like the truth. (the answers are already known)

1) Central bank real rates were negative (no incentive to save, every incent to speculate)
2) Investment Banks were not regulated by chartering authority
3) Ratings agencies were transposed into NY City "call-girls"
4) SEC has grown into stooges for Wall Street rather than regulators. e.g. naked shorts, etc