Commission looks for answers to crisis
Congress' Financial Crisis Inquiry Commission will soon begin investigating how the U.S. economy came close to collapse. The commission's chairman, Phil Angelides, talks with Kai Ryssdal about what he hopes to find and how it may aid regulation.
Phil Angelides (calhsng.org)
More on America's Financial Crisis
TEXT OF INTERVIEW
Kai Ryssdal: In 1932 Congress approved a commission to investigate what had happened to cause the Great Depression, to name names if it had to, and to propose fixes that would prevent another depression from ever happening again. After Lehman Brothers collapsed last year we got about as close as we're hopefully going to get to another Great Depression.
So this time Congress didn't wait three years to start its investigation. The Financial Crisis Inquiry Commission holds its first official meeting on Thursday. Former California State Treasurer Phil Angelides is the chairman of that commission. Mr. Angelides, welcome to the program.
PHIL ANGELIDES: Good to be with you.
Ryssdal: The broad outlines of this financial crisis, and how it started are already known. What more can we expect to learn from you and your commission?
ANGELIDES: I think it's very important that the American people have the full picture of what led to the financial meltdown. I mean, our capitalism system almost collapsed. We now have seven million jobs that have lost been lost since the financial meltdown began. Millions of people have lost their homes. And it's important as nation that we do a full examination into the practices that brought us to the brink. It's elementally important that we understand because in fact those who do not know history are doomed to repeat it. And I think there are a lot of folks who are hoping they can get back to business as usual but we can't afford that as a country.
Ryssdal: I want to get back to that point in just a second. But let me ask you this, can we expect you to name names, and cast blame and say it was this company's fault, and these people's fault, and they sold these products and that was damn near criminal.
ANGELIDES: You know people have asked if me if there's going to be embarrassing instances here. I mean the fact is we will pursue facts. And if the facts turn out to be embarrassing or if they turn out to be criminal, so be it. But I do think it would minimize our inquiry if all it was about finding 20 or 30 people who broke the law. This was a widespread phenomenon in terms of what happened in this country. Some of the practices that we were engaged in, I think it's important to note, were not only permitted, but they were applauded and exalted. So I think we'll be looking at the whole range of behavior.
Ryssdal: Let me get back to that point about the banks thinking they can go back to business as usual. You know, the president yesterday, when he was talking on Wall Street, said, in essence, the same thing. That these banks are making these loans and refinancing and repacking more mortgages. How can we believe that banks and Wall Street aren't going to keep on doing the same thing even though your commission is trying to get to the bottom of this?
ANGELIDES: Well, I do think that this is about changing values and culture over time. And change starts with a recognition of what's happened in the past. It's a little bit like someone who has been a drinker, a smoker, a bad eater who then has a heart attack. You know, some people take it to heart and begin to diagnose what went wrong and change their behavior. Others go back to just doing the same old thing. If you will, if our commission's work is done right, we will be an antidote, not the antidote, to the quick return of egregious practices.
Ryssdal: Congress is expected to take up financial reform this fall. The president said he wants something by the end of the year. Yet your report isn't due until the end of next year. December of 2010. Do we have to wait for you and your commission before we can really figure how to change the rules?
ANGELIDES: No, I think people can move on parallel tracks. As we do our public hearings, our investigation, more facts will come to light. And the president and the Congress ought to take those into account. When we produce our final report, hopefully they will see things in our final report that will be a call to further action. But in any event, no matter whether they pick structure A or structure B for regulation, because in the end we did have regulators, they just didn't do their jobs, in the end hopefully our history will be a guidebook for regulators and people in the markets.
Ryssdal: Phil Angelides. He's the chairman of the Financial Crisis Inquiry Commission. They're set to have their first public meeting on the 17th, that's Thursday. Mr. Angelides, thanks so much for your time.
ANGELIDES: Terrific. Thank you so much for having me with you.
Comments
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From Falls Church, VA, 09/16/2009
Among the many causes of the crisis, there is one an area that I have not heard explored: What influence did the Federal mortgage interest tax deduction play as an incentive for people to maximize their mortgage debt in order to maximize their write-offs. How many of the people who got in over their heads would have chosen a smaller house/loan or paid down their mortgage rather than use their equity to take out more money if it weren't for that deduction? This policy supports lenders more than it supports home-ownership. If you actually OWN your home (all paid off), you get no deduction, a problem for the elderly trying to pay rising property taxes. The policy is regressive, helping the wealthiest people pay for the biggest, energy-guzzling houses they can get. There are some good reasons to support home ownership, but why not give a fixed deduction without regard to how much you owe, and eliminate the Federal tax incentive to take on excess debt? It's not the biggest cause of the problem, but I hope the commission considers how our tax policy may have exacerbated the problem.
From Winston-Salem, NC, 09/16/2009
You missed a great opportunity to ask if this "commission" will have the courage to point the finger at Congress, and its 40 years of deficit spending. The ultimate cause of current problems is too much debt, both individual and collective.
From Richardson, TX, 09/15/2009
People seem to like to blame consumers for overspending.. wasn't consumers that were playing the derivative and "bad insurance" game....
Before the mortgages started being a problem, there was a big issues on exchange rates... So a UK bank that bought US Mortgage securities - would find that it's investment had dropped a lot.... and this is not talked about. Do some math - and is was a much bigger problem than home foreclosures... for quite a while... So hopefully we can get some **real ** cause and effect out of Mr. Angelides and his research...
From Silver Spring, MD, 09/15/2009
One thing I think history will eventually show is that an economy based so heavily on consumer spending is not sustainable. I can't imagine how our economy could possibly remain stable in the long run. If we all behave responsibly, saving for our futures (and our children's futures) and spending within our means, the economy slows and we find ourselves in recession. If we spend beyond our means, then eventually credit markets collapse and we find ourselves where we were last fall. We need a major cultural shift, not just a temporary burst of financial discipline to weather the recession.
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