Panel looks at toll of financial crisis on state

After nine months of televised hearings, private interviews and document gathering, the Financial Crisis Inquiry Commission ends the public portion of its business on Thursday in Sacramento.

Wall Street, the prime focus of its investigation into the causes and consequences of the Great Recession, has been "relatively unaffected," said the committee chairman, former California Treasurer Phil Angelides. Now it's time for "the rest of the story" - the devastation wreaked on places like Sacramento and the Central Valley - which he said the panel's 10 commissioners felt duty bound to tell.

They will hear from real estate agents, mortgage brokers, economists, community organizations and others about the epidemic of fraud and predatory lending, the Sacramento-to-Wall Street "mortgage securitization chain," and the meltdown's impact on neighborhoods, families and the entire region.

"We'll be looking at how the wheels came off, how it spread like an infection and the rubble that's been left behind," said Angelides, referring, for example, to the estimated 100,000 families who have lost their homes in the Central Valley.

Then it's on to writing the report that's due on President Obama's desk by Dec. 15. Angelides said the commission is still gathering information on "just how polluted the mortgage pipeline was." Specifically, more digging into the subprime arena, where the collapse in mortgage lending standards was "probably worse than anyone thought," said Angelides. Derivatives dealings by banks like Goldman Sachs is another piece of unfinished commission business.

"We'll continue our investigative work until the bell sounds," he said.

In addition to the final report, the committee's work will be published by Little Brown in the form of a book, similar to the 9/11 commission's tome, which became a best-seller. There will also be an interactive e-book version, with links to audio and written testimony and documents. A permanent website containing almost all of the commission's work is also planned.

-- Thursday's hearing, at the California Department of Education, 1430 N St. in Sacramento, is open to the public. If you plan to attend, you're asked to RSVP at fcic.gov, which is webcasting the proceedings. You can also submit written testimony to the site, "which may become a part of our final report," according to the commission.

Straight talk, expressly: So, we asked the state's current treasurer, Bill Lockyer, with the recession declared officially over, when might California feel like it is?

"Two to three years," he replied, during a meeting with The Chronicle editorial board on Tuesday.

Can't the state do more to help? "We pretend a lot, but realistically state government can't do much to influence the economy or job creation - not when there's a lack of consumer demand and businesses aren't hiring."

What about all those bonds the state issues? "They help, but the impact is marginal."

Given the budget impasse, what's the likelihood of a further credit downgrade from the nation's rating agencies? "I'm not saying it's going to happen, but I worry about it." Lockyer said he was also worried that the budget delay threatens the state's ability to keep 5,000 employees engaged in various public works projects on the payroll after December.

He said he's seriously thought of suggesting a complete cutoff of funds to Republican electoral districts whose representatives consistently vote no on spending and tax measures in the budget.

On pensions: "I believe in defined benefits, but there's going to have to be a national debate on the future of pensions, and Social Security." Lockyer's views on this "third rail" of the Democratic party: "Benefits have to be rethought and retirement ages need to be reviewed and adjusted." Otherwise, he added, we could be "creating a new generation of impoverished seniors."

Lockyer, who voted for Arnold Schwarzenegger in the 2003 recall election of then-Gov. Gray Davis, seemed not especially impressed with either candidate this year. "Neither of them has a plan that I've read that makes any sense," said the longtime Democratic office-holder.

Who's going to win? "I wouldn't call it (former eBay Inc. CEO Meg Whitman's) to lose, but let me just say I'm glad the election isn't today." There seems to be a lack of enthusiasm for Jerry Brown, an editorial page writer suggested. "You've got that right," Lockyer replied.

With regard to the attorney general's race, pitting San Francisco District Attorney Kamala Harris (whose appearance before the editorial board preceded Lockyer's by about 20 minutes) against Los Angeles D.A. Steve Cooley, "I think Cooley's going to win, even though he's a mean, gloomy bureaucrat," Lockyer, himself a former state attorney general, said of the Southern California Republican.

Ex-Hewlett-Packard Co. CEO Carly Fiorina's chances against incumbent California Sen. Barbara Boxer? "I'm told Boxer's internal poll shows Boxer ahead by eight points," he said. "But there's this wave of idiocy that will make a lot of difference in a lot of races," he said.

According to his own polls, Lockyer says he's looking pretty good for a second term as treasurer. But he's ready to spend $5 million in campaign cash, just in case.

Blogging at sfgate.com/columns/bottomline. Facebook page: sfg.ly/doACKM. Tweeting: @andrewsross. E-mail: bottomline@sfchronicle.com.

This article appeared on page D - 1 of the San Francisco Chronicle