08/21/2009 05:12 am ET Updated May 25, 2011

Congress' Wall Street Investigators Will Have Teeth But They Won't Investigate Congress

Phil Angelides has a job that millions of Americans who saw their portfolios vanish this past year would love. The former California state treasurer is set to chair the congressional inquiry into who and what, exactly, were responsible for the collapse of the nation's financial sector. And he has the tools to make it work, including an $8 million budget, a staff of investigators and subpoena power to compel testimony.

"Our job is to leave no stone unturned in ascertaining the facts about what brought down our financial system," Angelides said in an interview with the Huffington Post. "We are going to highlight for the administration, Congress and the public what were the factors, what were the practices, that brought our financial system to its knees."

It is, to be sure, the type of investigatory process that ideally will produce changes both in how the nation's financial industry conducts its business and how the government regulates the financial sector. But to dismiss the retributive aspects of this modern day Pecora Commission would be to do it an injustice. Angelides earned his stripes mobilizing California's massive pension funds to confront Wall Street for its economic and environmental practices. Now Congress, progressives and a host of burned investors are looking for him and the other nine members of the Financial Crisis Inquiry Commission to deliver truth and justice to the economic meltdown.

"What happened here, the impact, which will be felt for a long time, is consequential enough that the American people deserve the light of day being shone on the practices that should not be repeated," he says. "Our mission is to find the truth -- to get the facts on the table. And we'll be diligent... We're not there to put discipline on the shelf. This is serious business. Taxpayers have lost more than a trillion dollars to bolster the financial system. It's pretty serious stuff. So we'll pursue it in a very strong and measured and professional way."

There are limitations, however, to what Angelides and his colleagues can do. While good government officials are pining for the group , which was created by Congress to investigate the roots of the crisis, to look into how lawmakers aided Wall Street's collapse, Angelides firmly insists that his purview does not extend to the legislative or executive branch.

"The focus is the financial markets and the regulatory process," he says. "I want to be clear, ours is not a political mission. Ours is a fact-finding mission into the heart and soul of what went awry in the financial markets and the regulatory system."

Moreover, while his unit has been granted the power of subpoena, politics could end up complicating its use. The Financial Crisis Inquiry Commission is made up of six Democrats and four Republicans. A subpoena can only be issued if there is at least one member of the other party that agrees to its issuance.

Still, the commission should not lack for fireworks and dramatics. It will hold public hearings and issue reports during the course of its investigation, which will extend through 2010. And, as Angelides notes, it will have the "the ability to refer for criminal prosecution."

The commission is planning to have its first organization meeting in August, in which it will outline the best way to research the crisis, and formulate an investigatory process that allows even the most plebian of informants to come forward with information. Among the issues it will look into include executive compensation practices, the failure of regulators, the rise of exotic financial instruments and the hollowness of credit rating agencies.

Having spent the large portion of the past decade arguing for the need for tougher regulation of the financial markets -- along with pushing for increased shareholder power over corporate governance -- Angelides now finds himself in a unique position to achieve these goals. His commission will work in parallel with a Congress that is, itself, charting out a new framework for regulatory policy. Certainly, he envisions influencing that forthcoming legislation. But in investigating how institutions deemed "too-big-to-fail" ended up failing, Angelides sees his directive as being much broader than merely helping Congress dig up facts.

"To be successful," he said, "we will have told the story of what happened to our financial system and our economy in very clear terms so that conduct and ethics are different, so that needed laws are passed, and more than anything else, so that everyone who participates in the financial system has a fair understanding of what's in the interest of the country's future and what's not."

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