Phil Angelides, a Democrat and a former California Treasurer and member of Leadership 100, who was appointed Chairman of a bipartisan commission established in 2009 to examine the causes of the biggest economic downturn since the Great Depression, opened hearings into the near-collapse of the financial system in 2008 on Wednesday, January 13, 2010, by pressing the heads of the nation’s largest financial institutions, focusing his questioning on Lloyd C. Blankfein of Goldman Sachs.
In his opening remarks, Angelides noted that “nearly seven million Americans have lost their jobs in the downturn, while nearly 25 million — over 16 percent of work force — are unemployed or underemployed. More than two million families have lost homes to foreclosure in the last three years and households have seen $13 trillion in wealth evaporate.”
“People are angry,” Angelides said. “They have a right to be. The fact that Wall Street is enjoying record profits and bonuses in the wake of receiving trillions of dollars in government assistance — while so many families are struggling to stay afloat — has only heightened the sense of confusion.”
Blankfein was joined in the hearing room of the House Ways and Means Committee by three other Wall Street financiers: Jamie Dimon of JPMorgan Chase, John J. Mack of Morgan Stanley and Brian T. Moynihan of Bank of America.
Dimon urged lawmakers to re-examine the role of regulators in the system, though he noted “the responsibility for a company’s actions rests with the company’s management.”“No institution including our own should be too big to fail,” said Dimon.
The 10-member commission, with a budget of just $8 million, is charged with delivering a comprehensive report to President Obama by Dec. 15 on 22 factors associated with the crisis, from mortgage fraud to regulatory failings. The vice chairman of the panel is Bill Thomas, a Republican and a past chairman of the House Ways and Means Committee. Bob Graham, a former Democratic Senator from Florida, and Brooksley Born, former chairman of the Commodities Futures Trading Commission are also on the board. John W. Thompson, board chairman of security software Symantec Corp., Heather Murren, a retired Merrill Lynch director and Byron Georgiou, a Las Vegas attorney, were the members suggested by Democrats. Douglas Holtz-Eakin of DHE Consulting, Peter Wallison of the American Enterprise Institute and Keith Hennessey, an economic adviser to former President George W. Bush were appointed by the Republicans.
In particular, the commission will look into issues such as the role of exotic financial instruments and credit rating agencies, executive pay, and why the regulators failed to handle risky lending at banks. . The commission, with subpoena power, is supposed to be modeled on the Pecora Commission, which investigated the events that led to the 1929 stock market crash and the Great Depression.