08/14/2009 05:12 am ET Updated May 25, 2011

Flaws Inherent in the Current Commission, and How to Minimize Them

Congress recently passed legislation establishing the Financial Crisis Inquiry Commission (FCIC). The law was a significant accomplishment because it was strongly opposed behind the scenes by many powerful forces, but its design does not meet many of the standards that made the Pecora investigation so successful. A commission of this nature is unwieldy and political. It cannot be non-partisan, it cannot be unified, and it is extremely difficult to make it effective. Having a large number of prestigious, often political commissioners also makes it unlikely that they will take the steps essential to minimize the flaws inherent in any investigative commission. The only way to minimize these flaws is to pick a Pecora as its executive staff director and then let him or her run the investigation, including the questioning. The difficulty, of course, is that commissioners -- selected through a political process, from the political class, for a partisan political purpose -- are among the least likely to be willing to take a back seat role and allow a professional investigator to take the lead.

The commissioners' central functions are to select a modern Pecora as the executive staff director and then back him or her against the inevitable political push back. They need to recognize their inherent limitations. They will not be full-time, for example. Complex investigations have to be run by professionals working full-time on the investigation. The lead investigator and key staff will be working obscene hours for years. No part-time commissioner can come close to having their knowledge and few commissioners will have experience running complex financial investigations. Prominent commissioners, however, tend to want to make decisions. A complex investigation requires several gifted sous chefs operating under the overall direction of the top chef....

You can read the rest of my piece at New Deal 2.0.