Pelosi calls for panel to probe Wall Street

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Pelosi calls for panel to probe Wall Street

Democratic House Speaker Nancy Pelosi, saying that the American people are demanding "discipline and accountability" after the multibillion-dollar federal bailouts, promised Wednesday to create a legislative commission with broad oversight to investigate the causes of Wall Street irregularities and their full costs to taxpayers.

Pelosi, speaking to the Commonwealth Club of California, said she wants the panel to be modeled after the Pecora Commission, a bipartisan investigative body established by the U.S. Senate in 1932 to examine the causes and abuses of the Wall Street crash of 1929 and to prevent a repeat.

"They investigated what happened in the markets," including conflicts of interests and irregularities that set off such devastating effects on the U.S. economy, she said. When the commission issued its findings during the administration of President Franklin Delano Roosevelt, "they had tangible recommendations," she said, which helped generate widespread public support for major banking system reforms and new securities laws.

Pelosi said she discussed the matter with Treasury Secretary Timothy Geithner on Wednesday and will raise the matter with her colleagues in the House of Representatives next week. She said her actions have been sparked by the observation that, no matter where she travels in the United States, she hears concern about financial irregularities.

"People are very unhappy with these bailouts," particularly multimillion-dollar bonuses paid out to executives of failing firms like American Insurance Group, or AIG, that have received federal bailout funds, she said.

"Seventy five percent of the American people, at least, want an investigation of what happened on Wall Street," the speaker said to applause.

"We're going to have a commission ... even if it is only in the House of Representatives," Pelosi pledged, saying it would allow Americans "to have a clearer understanding of how we got here - and the risk that's been taken by the taxpayers in all this."

"That's what we would do with this commission, is to make sure it does not happen again." she said.

She said the move coincides with legislation she soon will send to President Obama on financial institution regulation and reform, "so we have transparency ... discipline and accountability to the American taxpayer."

Pelosi made the unexpected announcement in response to a question from Commonwealth Club CEO Gloria Duffy just one day after Obama's speech on the economy at Georgetown University. In his speech, Obama said oversight and regulation of Wall Street would be one of five pillars in his "new foundation" for the American economy.

Veteran political consultant Don Solem of San Francisco said that with economic issues continuing to be high on the lists of Americans' concerns, Pelosi's announcement is a savvy move.

He said the Depression-era commission's findings "laid the groundwork for rapid movement that included the creation of the Securities and Exchange Commission" and critical oversight regulations that followed.

"When the public doesn't know something, it becomes suspicious of everything," Solem said, adding that in the current financial crisis and resulting bailouts, "the American public is hearing a lot of perspectives, many of them ideological in nature."

"They want the facts, why certain things didn't happen at certain points, and what can be done to prevent it," he said. But "what's been missing to date ... is that it hasn't been stitched together by anyone in a comprehensive manner with oversight," such as the 9/11 Baker-Hamilton Commission did when it presented its findings on domestic terrorism in a bipartisan and comprehensive manner with enormous credibility.

Still Solem warned, to succeed "this commission must be broad and comprehensive - and viewed as preventive. If there's fault-finding ... then it ought to move to the proper channels."

The Pecora Commission was named after Ferdinand Pecora, chief counsel of the U.S. Senate subcommittee on banking, who led an investigation beginning in January 1933 during the administration of Herbert Hoover.

Pecora was a high-profile figure who personally questioned many of Wall Street's most influential figures of the day. He was credited with uncovering a variety of abuses of banks and their affiliates. Roosevelt later appointed him to head the Securities and Exchange Commission.

http://www.sfgate.com/cgi-bin/article.cgi?.../MNAB1733BH.DTL