Congress Creates Commission To Dig Into Financial Crisis

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MICHELE NORRIS, host:

In Washington, few things are more familiar than Congress creating a commission. Blue-ribbon panels follow virtually every major misstep. We're going to spend time now looking at the special commission assigned with the task of trying to determine the cause of the catastrophic financial crisis.

First, a few facts about the panel: It's called the Financial Crisis Inquiry Commission, or FCIC, and it was established by Congress and the Obama administration. There are 10 members and the commission will hold hearings and publish a report by the end of 2010. The first hearings are scheduled for next week.

And we're joined today by the men who will run the bipartisan panel. The chairman is Phil Angelides, a Democrat who's the former California state treasurer, and former California Congressman Bill Thomas is the co-chairman. He's a Republican.

Welcome to both of you.

Mr. BILL THOMAS (Vice Chairman, Financial Crisis Inquiry Commission): It's good to be here with you.

Mr. PHIL ANGELIDES (Chairman, Financial Crisis Inquiry Commission): Thank you. Nice to be here.

NORRIS: Now, gentlemen, you said your job is to shed light and not heat on the Wall Street scandal. I thought it was an interesting statement because there are a lot of people who feel like a little bit of heat is exactly what's needed when dealing with the bankers who helped bring down the economy.

Mr. ANGELIDES: Well, this is Phil. Let me start off by saying that there is a lot of anger in this country about what's transpired. People across this country want to understand what happened, particularly in the context of Wall Street having a record year. The fact is that as the country struggles, the financial crisis seems to be existent everywhere but for what was the epicenter of the financial earthquake.

So we will be asking very tough, hard questions on behalf of the American people. But at the end of the day, the mission of our commission is to try to get to the truth, what really happened here, so that hopefully we do not soon repeat the mistakes that led to this cataclysm. So, yes, anger. And we hope to ask questions on behalf of the American people to get to answers that will satisfy some of that anger.

NORRIS: Mr. Thomas, Mr. Angelides noted that the sun is still shining in many places on Wall Street. Are you going to be just looking back at what caused the financial crisis? Or are you going to also be looking at the behavior of the people who run these big Wall Street houses today, the bonuses, the decisions that they're making right now?

Mr. THOMAS: Michele, I especially liked your introduction about commissions. I was in Congress for 28 years and saw a lot of commissions come and go. Most of the commissions that weren't successful tended to be creatures created by Congress as a substitute for the policymakers making policy. This commission is going to look a lot more like, for example, the 9/11 Commission, which was charged with trying to find out what happened. So the answer to that or any other question you might ask as to what we're going to do is going to be driven by how we get the facts, to what extent are people forthcoming. We do have the power of the subpoena. We can refer to the Department of Justice. That's not a threat. That's just an understanding on the part of Congress that some people may not be as willing as others to provide us with the questions that we've asked.

NORRIS: Your first hearings will be held next week. Who do you plan to call to testify at these hearings?

Mr. ANGELIDES: Well, we are holding two days of hearings. The first four witnesses will be the heads of the four big surviving investment banks: JP Morgan, Jamie Dimon, the head of JP Morgan, Lloyd Blankfein of Goldman Sachs, John Mack of Morgan Stanley and Brian Moynihan of Bank of America. We will then be hearing from people about the impacts of the crisis on ordinary Americans. Day two will be given over to federal, state and local officials who are attorney generals and local prosecutors, telling us about what their investigations have revealed about the financial crisis.

NORRIS: At the end of 2010, you are going to have to produce a document that will include all of your findings. We're talking about financial instruments that were so complex that the people who ran these credit default swaps couldn't even explain them in English themselves. So how at the end are you going to be able to produce a report that the average person will be able to read and understand? And again, I'm thinking about the 9/11 Report, which read almost like a novel in the telling of what happened and what they discovered. Mr. Thomas?

Mr. THOMAS: You know, it's been said that pride goeth before a fall but so does arrogance and avarice. The regulators were supposed to be regulating. There were institutions that did have the power to examine and have the competency to examine, and they were a little bit lax. So our job doesn't have to be a technical graduate course in advanced economics. But you can in a relatively simple way explain arrogance, avarice, failure to follow through on your job and the consequences of that.

NORRIS: How effective can this commission be, since Congress is already at work on a number of financial reforms that actually might be complete before your work is finished at the end of 2010? Does this mean by default that the commission's work will become more anthropological than actionable?

Mr. ANGELIDES: Well, let me say, to start with, this national debate about how we reform our financial system is just beginning, not ending. And let me just say this - and this is not to minimize legislation - but even if Congress were to act in the next couple of months - and who knows when they will - on financial reform legislation, if they create a new agency or new powers, let's be clear: We had regulatory authorities. We had agencies with lots of authority. What matters is how are the laws implemented? How do regulators pursue their job? How do people act in the marketplace?

Mr. THOMAS: I hate to sound like a broken record, but having been in Congress for 28 years, if you think between now and this December, Congress is going to pass several different pieces of legislation, given the comprehensive nature of the financial crisis, through committees that have narrow jurisdiction, it's just not going to happen.

NORRIS: Should the people who run the large investment houses, the rating agencies, even people who worked and presently work in the SEC or worked in the SEC under the previous administration, should they be afraid of what you're doing?

Mr. ANGELIDES: My view is that there's a need for accountability and responsibility, and I think it serves everyone's purpose to get the facts and the truth on the table so that this country can move on. And you know, there may be some people who are going to be afraid, but no one should be afraid of the truth, even though I'm sure there are a lot of people who would just assume that we didn't exist for the next year.

NORRIS: Mr. Thomas, Mr. Angelides, thank you very much for your time.

Mr. ANGELIDES: Thank you.

NORRIS: That was Democrat Phil Angelides and Republican Bill Thomas, chair and co-chair of the Financial Crisis Inquiry Commission. The commission's hearings will begin next week.

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