Why Congress Won’t Investigate Wall Street

Why Congress Won’t Investigate Wall Street

The famous Pecora Commission of 1933 and 1934 was one of the most successful congressional investigations of all time, an instance when oversight worked exactly as it should. The subject was the massively corrupt investment practices of the 1920s. In the course of its investigation, the Senate Banking Committee, which brought on as its counsel a former New York assistant district attorney named Ferdinand Pecora, heard testimony from the lords of finance that cemented public suspicion of Wall Street. Along the way, the investigations formed the rationale for the Glass-Steagall Act, the Securities Exchange Act, and other financial regulations of the Roosevelt era.

Over the years, federal agencies have been defunded, their workers have grown dispirited, their managers, drawn in many cases from antiregulatory organizations, have seemed to care far more about industry than the public.

And while today’s chastened Democrats might be ready to reregulate the banks, they are no more willing to scrutinize the bad ideas of the Clinton years than Republicans are the bad ideas of the Bush years.

“We may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner,” Pecora wrote in 1939, “lest, in time to come, some attempt be made to abolish that post.” Well, the time did come. The attempt was made. And we could use that reminder today.

Well said. The incredibly dire current economic results should encourage some thought about choices we have made. The failures of the political leaders (putting their donors interests above the public interest) is something that should be investigated seriously. The economy declined 6.3% in the fourth quarter of last year and 6.1% in the first quarter of 2009. And we have paid several hundred billion to bail out bankers; the same bankers that had congress repeal the regulation that prevented such enormous failures in the past.

It would be nice if we at least learned our lesson, but I don’t think we are remotely close to learning our lesson. There seems to be some tilt away from the most egregious excesses of the last 25 years of financial deregulation. But only minor adjustments around the edges seem to be under consideration at this time.

Related: Failing to Understand the Capitalist Economic ModelLooting: Bankruptcy for ProfitLeverage, Complex Deals and ManiaLobbyists Keep Tax Break for Billion Dollar Private Equities Deals (2007)Congress Eases Bank Laws (1999)Why Pay Taxes or be HonestFailure to Regulate Financial Markets Leads to Predictable ConsequencesLosses Covered Up to Protect BonusesBankers Bet Billions and Lose (guess who pays? Not them)Uncertain Economic Times

2 thoughts on “Why Congress Won’t Investigate Wall Street

  1. I know enough has been said about the current economic situation, but it really is crazy how much money was given out to failing businesses. It boggles my mind how a country that claims to be capitalist can just reach into the pockets of the taxpayers and handout free money to businesses. If a business is failing, then it needs to fail. Just my 2 cents…

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  2. Pingback: India Grew GDP 8.6% in First Quarter at Curious Cat Investing and Economics Blog

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