Crisis commission is a wasted opportunity

First, carry out the sentence. Then select the jury (preferably a dysfunctional or biased one). Finally, hold the trial and announce the verdict. That is the peculiar process that Congress and the Obama administration are following in trying to ensure that there will be no repeat of the financial crisis.

On May 7, Congress passed a bill establishing the Financial Crisis Inquiry Commission to determine the causes of the financial meltdown and recommend regulatory changes. President Obama signed the bill a few days later. In theory, it is a great idea.

On July 15, congressional leaders announced the names of the 10 commissioners who will direct the investigation, and pledged that the commission will have the staff, the funding and the authority necessary for a thorough investigation, an excellent second step.

However, the commission isn’t due to report its findings before December 2010, by which time the reform train will have left the station. In fact, Democrats expect to have passed all the financial-reform legislation before the 2010 midterm elections.

It is difficult to believe that Congress is serious about finding the causes of the crisis and fixing the flaws in the regulatory system. If it were, it would wait for the commission’s report before enacting reform legislation.

Some other purpose must be driving the establishment of the commission.

Perhaps some in Congress want to identify and punish a few investment bankers, mortgage bankers or mortgage brokers. Perhaps some want to bury any suggestion that congressional actions and government policies had any role in producing the bubble and the crisis. Perhaps they want ex post facto approval of the legislative steps Congress is in the process of taking.

If Congress truly wanted an unbiased report on the causes of the crisis, it would have established a non-partisan commission headed by a respected neutral figure such as former Federal Reserve Board Chairman Paul Volcker, and given it the time and resources to conduct a thorough, unbiased investigation.

PARTISAN MEMBERS

Instead, it established a bipartisan commission with six members selected by the Democratic leaders in the House and Senate, and four selected by the Republican minority leaders. The bipartisan commission that investigated the Sept. 11, 2001, terrorist attacks, on the other hand, had an equal number of Democrats and Republicans.

The result is a commission composed of 10 highly partisan members who will do their best to protect their constituencies from any blame.

For example, the Democratic leaders selected as chairman of the commission Philip Angelides, the former state treasurer of California and a former gubernatorial candidate, who has been highly critical of the financial services industry and who can hardly be expected to enter the investigation with an open mind.

The Republicans chose as second in command retired California congressman William Thomas, a combative former chairman of the House Ways and Means Committee.

This structure almost guarantees a commission divided along party lines, a weakened investigation and ultimately a majority report and a minority report with little unanimity on the key causes of the crisis or the preventive measures to be taken.

What a wasted opportunity.