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Financial Crisis Inquiry Commission

On May 20, 2009, President Obama signed into law the Fraud and Recovery Act of 2009.  Included in this Act was a provision (Section 5) to create a Financial Crisis Inquiry Commission.  This commission is supposedly modeled after the Pecora Hearings of the 1930’s and the independent 9/11 Commission.  The purpose of this Commission is to investigate the causes of the current financial crisis.  To date (July 7, 2009), the Commission has not been activated.

Pecora Hearings

The Pecora Hearings took place in the 1930’s in the aftermath the stock market crash of 1929.  Named for the independent investigative counsel for the Senate Banking Committee - Ferdinand Pecora.  The Pecora Hearings uncovered illegal activity and unscrupulous practices of Wall Street and big banks.  The hearings led to major financial regulatory reform such as the Glass-Steagall Act and the Securities and Exchange Acts of 1933 and 1934.  Here is a link for more information on the Pecora Hearings.

Financial Crisis Inquiry Commission

In April 2009, Speaker Nancy Pelosi started talking about the possibility of a Pecora-type commission.  An amendment to the Fraud and Recovery Act of 2009, which was signed into law on May 20, 2009, included a provision that created the Financial Crisis Inquiry Commission:

SEC. 5. FINANCIAL CRISIS INQUIRY COMMISSION.
(a) ESTABLISHMENT OF COMMISSION.—There is established in the legislative branch the Financial Crisis Inquiry Commission
(in this section referred to as the ‘‘Commission’’) to examine the causes, domestic and global, of the current financial and economic
crisis in the United States.

(b) COMPOSITION OF THE COMMISSION.—
(1) MEMBERS.—The Commission shall be composed of 10 members, of whom—

(A) 3 members shall be appointed by the majority leader of the Senate, in consultation with relevant Committees;

(B) 3 members shall be appointed by the Speaker of the House of Representatives, in consultation with relevant
Committees;

(C) 2 members shall be appointed by the minority leader of the Senate, in consultation with relevant Committees;and

(D) 2 members shall be appointed by the minority leader of the House of Representatives, in consultation
with relevant Committees.

(2) QUALIFICATIONS; LIMITATION.—
(A) IN GENERAL.—It is the sense of the Congress that individuals appointed to the Commission should be prominent
United States citizens with national recognition and significant depth of experience in such fields as banking,
regulation of markets, taxation, finance, economics, consumer protection, and housing.

(B) LIMITATION.—No person who is a member of Congress or an officer or employee of the Federal Government
or any State or local government may serve as a member of the Commission.

(3) CHAIRPERSON; VICE CHAIRPERSON.—
(A) IN GENERAL.—Subject to the requirements of subparagraph (B), the Chairperson of the Commission shall
be selected jointly by the Majority Leader of the Senate and the Speaker of the House of Representatives, and
the Vice Chairperson shall be selected jointly by the Minority Leader of the Senate and the Minority Leader
of the House of Representatives.

(B) POLITICAL PARTY AFFILIATION.—The Chairperson and Vice Chairperson of the Commission may not be from
the same political party.

This Financial Crisis Inquiry Commission has been granted wide authority including subpoena power.  The legislation does require that the Commission file its conclusions by December 15, 2010 - a rather short deadline.  As of July 7, 2009, the Commission has not been activated.  The issue is whether the truth will hurt both political parties including several top advisors and cabinet members in the Obama Administration.  In a short period time we will know if Congress and the Administration are serious about finding the true causes of this financial crisis.