The Financial Crisis Inquiry Commission!

Did you know we have launched a commission to study just what it was that brought our financial system to its knees in 2008?  Maybe greed had something to do with it!  Anyway, I found this report in an article published last week in the UK Daily Mail.  This commission is a prototype of the Pecora Commission, the Senate committee that investigated Wall Street abuses in 1933-34.

The commission has pledged that it will make “a full and fair inquiry into what brought our financial system to its knees”.  They further say they will “explain it in a way the American people can understand”.  Now that would be a switch!  The Commission started off by interviewing high profile financial leaders such as: Goldman Sachs’ Lloyd Blankfein, J.P.Morgan Chase’s Jamie Dimon, John Mack of Morgan Stanley and Bank of America’s Brian Moynihan.  As a group these leaders all tended to apologize for their risky behavior and poor decisions during the turmoil of  2008 but to a man they all justified their current compensation decisions.

The general “party line” seems to be, as expressed by Brian Moynihan, that “the vast majority of our employees played no role in the economic crisis’ and therefore do not deserve to be penalized with lower compensation.  Of course we all know that B of A paid their Bailout money back early and most analysts believe they did that so they wouldn’t have to follow the Obama guidelines to lower high bonuses.  I for one sincerely hope this commission will uncover just how these institutions actually were able to generate the fast profits used to make their early Bailout payoffs.  If they do, I think we will all find out that it was a combination of manipulating “free” government money for high profits and implementing changes in accounting and reporting standards – to favor the banks balance sheets of course.

Anyway, you should check out this article for yourself and I will try to find out what the US media has to say about these commission hearings (if anything!) as well.  I’ll report on what I find in a future blog.

Paul Davis, Market Advisors LLC