So now we have a commission, chaired by former California state treasurer Phil Angelides, to examine the causes of the financial crisis, inspiring ambitious hopes for future regulatory reform.
Lawmakers who created the commission said ... they hoped the Angelides commission would play a role similar to the one played by the Pecora commission in the 1930s. The work of that commission, named for Ferdinand Pecora, the investigative counsel for a Senate committee during the Great Depression, contributed to the creation of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation and provisions in the Glass-Steagall Act, which separated investment and commercial banks.
That would be nice, but don't get your hopes up. Aside from Brooksley Born, the former chair of the Commodity Futures Trading Commission, who tried (and failed) to get credit derivatives regulated during the waning years of the Clinton administration, the rest of the six Democratic nominees on the committee are a middle-of-the-road bunch who aren't likely to fundamentally shake up the system. And Californians who remember Angelides' lackluster campaign for governor against Arnold Schwarzenegger in 2006 aren't going to be too excited about his transformative potential.
But a critical appraisal of the Democratic appointees pales against the Republican appointees, who, naturally, include people who have made it their life work to fight against regulation of any kind.
Exhibit A is American Enterprise Institute fellow Peter Wallison. To give a sense of what Wallison is all about, his current crusade is to stop the creation of a Consumer Financial Protection Commission, which he has previously called one of the most "controversial pieces of regulatory legislation ever presented to Congress." The Washington Post published his latest attack on such a commission on Tuesday, "Elitist Protection Consumers Don't Need."
The Baseline Scenario's James Kwak and Mike Rorty at RortyBomb do a sufficiently comprehensive job of taking apart Wallison's opinion piece that I don't need to repeat their eviscerations. The key point: His only prescription for avoiding the mortgage lending abuses that contributed to the financial crisis is more disclosure, which, as Kwak points out, we've already tried, and it didn't work.
Wallison is also opposed to a systemic risk regulator, and has already decided who caused the financial crisis: government regulators! There is no possibility of common ground between the Democratic appointees to this commission and a man like Wallison. As a former White House counsel and Treasury Department lawyer for Ronald Reagan, Wallison is an integral part of the network that weakened the regulatory structure that emerged from the Great Depression and the Pecora Commission.