“Legal chicanery and pitch darkness were the banker’s stoutest allies.”
– from Wall Street Under Oath, 1936, the memoir of Ferdinand Pecora
In 1933, Ferdinand Pecora – lead counsel for the Senate Banking and Currency Committee inquiry – led an investigation into the causes of economic collapse that preceded the Great Depression. His unrelenting investigation provided the evidentiary basis for legislation that restored market integrity and rebuilt public confidence in the financial markets and the banking system. For 45 years – until many of the New Deal protections were removed by de-regulation and insufficient supervision – these laws formed the basis of an economic structure that created prosperity and withstood crisis.
By taking lessons from the original commission in its design and execution, the recently established Financial Crisis Inquiry Commission (FCIC) can ensure that it provides the insights necessary to understand what caused the crisis and, in so doing, to protect the nation from future collapses.
Please join us in signing this letter that encourages the new “Pecora” Commission to pursue rigorously the truth.
Dear Members of the Financial Crisis Inquiry Commission,
In this moment of great economic turmoil, there is a simple but critical question that we must ask and answer together as a nation:
What caused the crisis?
We, the undersigned, call on you to fulfill the responsibilities of your position by joining together in non-partisan cooperation to investigate the origins of the financial crisis in ways that lead to a full understanding of the institutions, people and practices that are responsible for our economic collapse.
In particular, we encourage the adoption of three guidelines that history has taught us are essential to an effective inquiry:
– Appoint a single investigator. This individual must have a proven record of exposing fraudulent elites and institutions, and must provide a professional, non-political spirit to the investigation.
– Afford no special treatment. No one is off-limits or gets special protection in the investigation.
– Provide the tools to do the job. The investigator must be given ample budget and time, full subpoena authority, and the ability to hire and fire staff.
These principles were applied in the 1930s when Congress launched a formal inquiry into the causes of the Great Depression. That commission – led by Ferdinand Pecora – was willing to reach into the highest levels of Wall Street and finance to determine the causes of the economic collapse of 1929. The courage with which the commission greeted its task – and the revelations that courage ensured – inspired the sweeping banking and financial reforms that were the bedrock of our financial system for decades.
Building a new financial foundation requires us to begin on solid ground – the truth. It is only by illuminating the mistakes of the past that we will be able to meet the great challenges of the future.
Thank you for your consideration, and for your willingness to take on this historic challenge.