Panel begins inquiry into financial meltdown

WASHINGTON — The chairman of a new congressionally appointed panel on Thursday pledged to deliver a no-holds barred investigation into last year's devastating economic collapse, including whether big financial firms and their government regulators were guilty of criminal misconduct.

Phil Angelides, appointed this year by Democrats to lead the 10-member Financial Crisis Inquiry Commission, said the group will examine the conduct of top officials at such firms as Lehman Brothers, Citigroup, AIG and Bear Stearns, as well as mortgage buyers Freddie Mac and Fannie Mae.

Angelides said he plans to release much of the panel's findings ahead of its December 2010 deadline in the hopes of informing congressional debate on the issue.

Democratic leaders have promised to complete by the end of this year legislation that would tighten federal regulations on banks and extend oversight to other institutions that influence financial markets.

"We must move forward on our work as quickly as possible so that it is as relevant as possible to the policymakers in Congress," said Angelides, a former state treasurer for California.

The commission held its first public meeting Thursday, four months after being established as part of a mortgage fraud bill passed by Congress. With a budget of $5 million and the power to subpoena records, the commission will be the first independent accounting of what caused the nation's financial meltdown.

Angelides promised a nonpartisan investigation, although the committee faces dueling ideologies among its members. Republican Bill Thomas, the former GOP chairman of the House Ways and Means Committee who is serving as the panel's vice chair, said regulation shouldn't exist if it only gives the public a false security.

"Who was watching the watchers? Why weren't we able to detect (the crisis)?" Thomas asked.

After pushing through a $787 billion bill to stimulate an economic recovery earlier this year, President Barack Obama pledged a comprehensive rewrite of the rules governing the financial system. But the effort has lagged amid fierce opposition from the banking lobby, partisan bickering and a desire by Democratic leaders to first pursue health care reform.

Members of the panel said they hope their work will reinvigorate the debate.

Brooksley Born, a former government regulator who famously fought with then-Federal Reserve chairman Alan Greenspan in the late 1990s to clamp down on the growing derivatives market, said she hopes that Congress will act immediately to reign in what's known as an exotic financial market.

"We know there's enormous risk there," Born said in an interview. "We have no idea when the next explosion will occur."

Democratic activists are hoping the commission will resurrect voter frustration with the GOP ahead of the 2010 election. They are betting that much of the focus will be on former GOP President George W. Bush and his administration's push for deregulation and ties between big banks and conservative lawmakers – although a farther look back at the Clinton administration's handling of the economy also will likely attract scrutiny.

A coalition of liberal activist groups urged Angelides in a letter released Thursday not to pull any punches.

"The commission should name names. The public has a right to know who the people and institutions are that acted in an irresponsible manner – especially if they are still in positions of authority or influence," the groups wrote.

The activists set up a toll-free tip line and Web site, , to encourage whistle blowers to step forward. http://www.TellTheCommission.com

"People want to see Wall Street put on trial," said Tom Matzzie, chairman of Accountable America.