Posted on Monday, February 7, 2011
Frank Partnoy is correct when he argues that the Financial Crisis Inquiry Commission has proved to be a pale imitation of the original Depression-era Pecora hearings (“Washington’s Financial Disaster,” Op-Ed, Jan. 30). Those hearings captivated the country and created the political climate necessary to pass the New Deal’s reforms of the financial industry.
Mr. Partnoy argues that Congress should try again, but I am doubtful that such an effort would be successful. Perhaps we could find another lawyer with Mr. Pecora’s immense talents and willingness to go after the rich and powerful. What we cannot do is recreate Mr. Pecora’s impeccable timing.
Mr. Pecora took over the struggling investigation in January 1933. By the time the hearings were over, nearly every bank in the country was closed as governor after governor declared statewide bank holidays.
Mr. Pecora’s performance was remarkable. The financial machinations and lavish compensation he revealed shocked the country. Still, the hearings probably would not have had the lasting impact that they did had they not occurred in the throes of the worst financial crisis this country ever faced.
It was the Washington equivalent of a perfect storm — the precise combination of scandal and crisis necessary to pass substantial financial reform legislation.
If we are to have any chance of repeating Mr. Pecora’s success, we will likely have to wait for the next major panic to sweep the financial markets.
Michael Perino, THE NEW YORK TIMES