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Head of financial collapse commission vows to get answers

The chairman of the new commission on the financial collapse -- modeled on the 9/11 Commission -- promised on Friday an aggressive effort to hold accountable those who have so far escaped reckoning, while cautioning that the process would not necessarily lead to any prosecutions, The Post's Alec MacGillis reports.

In expansive comments before a Washington conference organized by Economists for Peace & Security, Phil Angelides, the former treasurer of California and unsuccessful Democratic candidate for governor, said that the commission is "in full gear" and that it would deliver an accounting of last year's collapse that is "desperately needed."

"The fact is, late in 1929 people were throwing themselves out the window on Wall Street. This year, they're lining up for bonuses," Angelides said. "There has been no serious self-examination on Wall Street of what has occurred and what it should be in the future. I liken it to someone who has had a significant heart attack, who's a bad eater, drinker, no exercise, and three weeks later they're feeling better, when the fact is the fundamental problems remain. So now is the time for examination."

Skeptics have questioned the commission's potential impact, worrying that it will have neither the high profile of the 9/11 Commission nor the punch of the Pecora Commission, the panel that investigated Wall Street abuses in the early 1930s.

But Angelides cited both of those bodies as his models.

Ferdinand Pecora, the older commission's counsel, "provided a great service to this country because he stripped the veil back on Wall Street and exposed to the American people a set of practices that when they saw them, the American people decided collectively they did not want to see anytime soon again," he said. "We take inspiration from what Pecora did because it was plain and simple. It was an investigation that revealed real practices and real institutions carried out by real people. He marched in National City Bank, he marched in J.P. Morgan, he marched in Chase Manhattan, he marched in the New York Stock Exchange and people saw a set of manipulations that they vowed they would not see again."

That said, Angelides said, people should not necessarily expect a line of bankers marching off to trial as a result of the commission's work. The commission does have subpoena power and he said he was sure it would uncover "culpability for Americans of all political stripes." But, he said, "I submit to you that if all we do is find 30 perps and line them up against the wall, we will have undersized the story. The truth is that much of what happened in the marketplace was not illegal but permitted, and not only permitted but exalted and applauded in our society."

Similarly, he said, the commission's success would depend less on whether it produces a raft of new regulations than on whether it helps bring about a shift in consensus about financial markets.

"Some people ask me, since Congress seems to be moving forward with [financial] reforms, is the commission of consequence to the American people?" he said. "True reform does not come with the sweep of legislation alone. A single piece of legislation that creates a new regulatory box in and of itself is not enough."

The New Deal financial reforms, he added, "were the product of many years of discussion about what we wanted our financial system to be. ... What's important is, how do we look at the marketplace, what is the political will, what is the consensus of this country about the proper functioning of the financial system. Ultimately, it's about culture and values."

The people he would have in mind as he runs the commission, he said, are ones like his elementary school friend who, as a result of the collapse, lost his real estate job and is now providing for his family on $32,000 a year at age 56, a 50 percent pay cut.

"There is a hunger on the part of Americans to know what happened, a hunger to hold people accountable, a hunger to ensure that people who acted irresponsibly take responsibility," he said. "Our charge is to take a look at the explosion and trace the fuse back to when it was lit. ... We haven't had that robust dialogue, we haven't gotten to the heart of what we want our financial system to be -- do we want it to be a system that's in and of itself is about making money, or do we want it to be a capital system that in the end is a driving force that helps create jobs and broadly shared prosperity?"

-- Alec MacGillis
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By Frank Ahrens  |  November 13, 2009; 2:30 PM ET
Categories:  The Ticker  | Tags: Phil Angelides, financial system reform, regulatory reform  
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