How to Create a Successful Pecora Investigation

The original Pecora investigation documented the causes of the economic collapse that led to the Great Depression. It was named after Ferdinand Pecora, lead counsel for the Senate Banking and Currency Committee investigation, whose inquiries established that conflicts of interest and fraud were common among elite finance and government officials.

The Pecora investigations provided the factual basis that produced a consensus that the financial system and political allies were corrupt. They did not divide the nation or divert its response to the economic crisis. The investigations discredited the elites that benefited from that system and were blocking reform. By identifying the most acute problems, Pecora provided the basis for Congress to draft specific legislation that restored public confidence in the financial markets and helped honest bankers. This staved off future crises in the U.S. for 45 years until the protections were removed by deregulation and de-supervision.

The Pecora investigation teaches us how to create a successful investigation that can provide the basis for the fundamental reforms necessary to protect the nation from future economic collapses. Pecora was a prosecutor in New York that had brought cases against "bucket shops" (fraudulent sellers of securities) and corrupt politicians (primarily Democrats). He was not a financial specialist. These are the key factors that made Pecora successful and that need to replicated today:

Leadership and accountability

• Pecora led the investigation and conducted the questioning. There was no "bipartisan" fiction or friction: Pecora was in charge. A professional with expertise in investigations must conduct the questioning, as members of Congress cannot do so effectively. Pecora picked his aides, not Congress.
• Pecora was non-partisan and known to be non-partisan.
• Pecora was fearless.
• Pecora was relentless and confrontational.
• President Roosevelt personally and strongly supported Pecora....

You can read the rest of William K. Black's piece at New Deal 2.0.

Comments

[Raphi]

01:18 PM on 07/13/2009

I followed the link to the New Deal 2.0 site. What a relief to read. In contrast to the usual apologists who seem to think working people are merely economic cannon fodder. But some of us do read, write, and think. About things like economics and history. And fairness. FDR was hesitant; tried to prop up the existing system. But pressure from the left, including labor, made it possible for both the President and Congress to initiate alternatives. We must do the same now. And not allow the 1/2 of 1% economic elite to finish turning the US into a one dollar, one vote system. What is so wrong with the theoretical underpinnings that this economic system requires public money, the product of working people, to bail them out? Obvuiously there is something major amiss. Let's find out exactly what. It is indeed time for Pecora 2.0.

[02bmw76]

12:17 PM on 07/13/2009

Mr Black is right. We definitely need a Pecora investigation. Everyone should read his book, The best way to rob a bank is to own one. Sadly, the Obama administration isn't cheerleading this type of reform and really is placating the banksters while burdening the US taxpayers through privatized profits and socialized losses. Just ask all the American patriots at Golman Sachs as they can't wipe the smiles off thier stupid faces as they await their double last year's bonus coming to them this year. Not the change I voted for when I voted for Mr Obama. We might as well have left GWB in the White House.