Top executives from four of the biggest banks that got federal bailouts are likely to face tough questions Wednesday from a commission charged by Congress to do the most thorough investigation yet into the causes of the financial crisis.
These will be the first public hearings conducted by the Financial Crisis Inquiry Commission, which has been compared to the 9/11 Commission. Phil Angelides, the new panel's chairman and a former California state treasurer, used some evocative language as he described the commission's task in an interview with NPR.
"There's a need for accountability and responsibility. And I think it serves everyone's purpose to get the facts and the truth on the table so that this country can move on," says Angelides, a former Democratic candidate for governor in California and one of six Democratic appointees to the commission.
There are also four Republican appointees, including Douglas Holtz-Eakin, a former director of the Congressional Budget Office.
"We owe the American people an official version of what happened," says Holtz-Eakin, who was the top economic adviser to former presidential candidate John McCain.
There's a need for accountability and responsibility. And I think it serves everyone's purpose to get the facts and the truth on the table so that this country can move on.
"This is a national crisis. It's an expensive national endeavor to repair it. And I think people have the right to understand what happened and why."
There are already plenty of explanations about what caused the financial crisis, from unrestrained risk-taking on Wall Street to irresponsible borrowing by homeowners. But Heather Murren, a former Merrill Lynch analyst and another Democratic appointee to the commission, says the cause and effect are not yet completely clear.
"Our job is finding the actual facts and also sorting out the things that were most important from the things that were perhaps less important," she says.
The commission has an $8 million budget and has assembled a staff of 35 to investigate and analyze the ocean of data, research and testimony already compiled on the crisis.
Congress asked the panel to review 22 areas of interest, from fraud and abuse in the financial sector to compensation practices. The commission will gather testimony in hearings, including several panels of witnesses Wednesday and Thursday. Among those set to appear are the CEOs of Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp.
Former Rep. Bill Thomas, a member of the panel, says the commission will be hard to ignore.
"We do have the power of the subpoena. We can refer to the Department of Justice. That's not a threat; it's just an understanding on the part of Congress that some people may not be as willing as others," Thomas says.
One other challenge the commission faces is that Congress is well down the road to a sweeping overhaul of financial regulation. The House has already passed a bill, and the Senate is likely to act before the commission's final report is due in December. But Holtz-Eakin says he and his colleagues can still have an impact.
"Financial regulation reform is not a one-shot operation," Holtz-Eakin says. "There will be future reforms in years to come. Even this reform has a timetable that's uncertain, so as they work on legislation this year and we find things, there's no reason why we can't inform the debate and provide some value."
Both Holtz-Eakin and Murren express confidence that the commission will not get bogged down in partisanship, and that it will be able to reach a high level of agreement on the causes of the financial crisis.
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