A Modern Pecora Commission ?


My Sunday Washington Post Business Section column is out. This morning, we look at the newly impaneled Office of Mortgage Origination and Securitization Abuses.

Print version had the headline A Chance for a modern Pecora Commission to right Wall Street wrongs.

It’s fair to ask: Is this new task force a meaningless exercise? The article looks at the ways to tell if this office is for real. How the structural set up of the office will reveal if this is a whitewash; further, the areas that get investigated will also tell us if this a serious investigation.

Here’s an excerpt from the column:

“So, here we are, four years after the great financial collapse, three years after the recovery began and in the last year of Obama’s term — and the president has finally decided to investigate the role of fraud in the great global financial crisis. Hence, this new task force — the unit of Mortgage Origination and Securitization Abuses — begins behind the curve. The statute of limitations is, in many cases, close to elapsing.

Even so, do not dismiss the investigation out of hand because of the timing: History informs us that a serious investigation can begin four years after the fact. Recall that Ferdinand Pecora was the fourth chief counsel for the Senate committee that investigated the Wall Street crash of 1929 and subsequent Depression. He was appointed in 1932 and received broad investigatory powers in 1933. His report ran thousands of pages. Thanks in large part to Pecora’s findings, Congress passed the Glass-Steagall Banking Act, which separated commercial and investment banking; the Securities Act of 1933, which established penalties for filing false information about stock offerings; and the Securities Exchange Act, which created the Securities and Exchange Commission to regulate the stock exchanges. Nearly 50 years of financial stability followed.”

The dead tree version of the paper has a classic photo of Pecora:

click for ginormous version of print edition



A modern Pecora Commission could right Wall Street wrongs
Barry Ritholtz
Washington Post, January 29 2012

Washington Post Sunday January 29 2012 page G6 (PDF)

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