By INVESTOR'S BUSINESS DAILY | Posted Thursday, April 16, 2009 4:20 PM PT
Finance: House Speaker Nancy Pelosi wants a broad "probe" of Wall Street, much like the 1932 Pecora Commission that led to sweeping bank reforms. Good idea. Let the probing begin — with Pelosi's Congress.
Named for its chief counsel, Ferdinand Pecora, the 1932 congressional commission dragged influential bankers and stockbrokers before its members for rough questioning — both of their business practices and private lives.
The Pecora Commission led directly to the Securities Act of 1933, the Securities Exchange Act of 1934 and the creation of the Securities Exchange Commission in 1935 to oversee Wall Street.
Now Pelosi's calling for an encore. "People are very unhappy with these bailouts," she noted, especially the bonuses that went to executives. "Seventy five percent of the American people, at least, want an investigation of what happened on Wall Street."
No doubt, that's true. The problem is, what "happened on Wall Street" was a direct result of what happened on Capitol Hill. And we're not the only ones who believe that, by the way.
"Government policies, especially the Community Reinvestment Act, and the affordable housing mission that Fannie Mae and Freddie Mac were charged with fulfilling, are to blame for the financial crisis," wrote economist Peter Wallison, a fellow at the American Enterprise Institute, recently.
"Regulators also deserve blame for lowering lending standards that then contributed to riskier homeownership and the housing bubble." Exactly correct.
As such, Pelosi's proposed Pecora-style commission will be little more than a fig leaf to cover Congress' own multitude of sins — letting its members, the true creators of this financial mess, bash business leaders as they pose as populist saviors of Main Street from Wall Street predators.
Why do this now? Pelosi and her Democrat colleagues are feeling the heat from Tea Party demonstrations and growing voter anger over the massive waste entailed in the $4 trillion (and rising) stimulus-bailout bonanza. Again, the Democrats created all this spending. Now, as it proves unpopular, they just walk away from it.
On NPR Thursday, a reporter confronted Rep. Barney Frank, chairman of the Financial Services Committee, with the fact that his $300 billion "Hope for Homeowners" program, passed with much fanfare last fall, had so far helped just one homeowner. One.
Frank's response: It was the fault of the "right." And Bush.
Truth is, Frank's party has been in charge since 2006. And during that time, Democrats have presided over one of the most disgraceful and least accomplished Congresses in history. This financial mess began on their watch, yet they pretend otherwise.
What better way to take the heat off yourself than by pointing accusing fingers at those most unlikable of people — Wall Street bankers? That's what the Pelosi-Pecora Commission will do.
It won't get to the bottom of our financial crisis; it will carefully select scapegoats to be ritually shamed by the liberal media, stripped of their wealth, and exiled. Then new rules will be imposed that will no doubt make things worse. And the cycle will begin again.
We're not saying Wall Street has no blame for the financial meltdown. But Wall Street didn't create the subprime mess. Congress, through repeated interventions in healthy markets, did. And when the whole thing failed, it was Congress' fault.
We'd be happy to support a 9/11-style commission to look into the causes of the financial meltdown. But only if Congress agrees to put itself in the dock. Anything less would be a sham.
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