Sense on Cents

I did not expect to learn anything riveting from today’s Financial Crisis Inquiry Commission’s questioning of the Wall Street CEOs and I didn’t.  Why?

The executives being questioned represent the survivors or are new to the game. Who are they?

Lloyd Blankfein of Goldman Sachs
Jamie Dimon of JP Morgan
John Mack of Morgan Stanley
Brian Moynihan of Bank of America

The Commission will be at work during calendar 2010, but the initial performance will pack the biggest punch and get the most attention. Why? Simply because the media will provide the greatest coverage to the opening round.

These executives are not going to provide any smoking guns as they protect their own firms and their own interests. These interests are ongoing.

America will likely only learn what truly happened to cause this crisis by questioning the following individuals, and if need be issuing subpoenas to do so:

Chuck Prince, former CEO of Citigroup
Ken Lewis, former CEO of Bank of America
Stanley O’ Neal, former CEO of Merrill Lynch
Jimmy Cayne, former CEO of Bear Stearns
Dick Fuld, CEO of Lehman Bros.
Joe Cassano, former head of AIG Financial Products
Mary Schapiro, current SEC Chair and previously head of FINRA

My primary belief why the system failed is the fact that Wall Street was, and to a large extent still is, a self-regulated industry. I give credit to Commissioner Heather Murren for getting ‘warm’ in touching on this regulatory topic while questioning Lloyd Blankfein. How did Blankfein respond? He skirted the regulatory component of Murren’s question and talked about Goldman’s auditors. Opportunity lost.

John Mack came back to Murren’s point on regulation and touched upon how Morgan Stanley, now a bank holding company, is regulated by the Federal Reserve. Mack commended the Fed for its aggressive oversight of Morgan Stanley. Again, opportunity lost. Murren could have and should have taken Mack back to the 2004-2008 time frame and drilled him on the self-regulation of Wall Street. America does not need to know how things are now. America is demanding answers about the causes and issues that brought about the crisis.

The FCIC obviously deserves the time to fully explore all lines of questioning with any and all individuals.  The Commission may have been established by Congress but it answers to the American public. Unless and until I see the individuals highlighted above sweating under the bright lights, I am not optimistic America will ever get the answers it rightfully deserves.

LD

Sense on Cents Related Commentary

The Financial Crisis Inquiry Commission Should Investigate . . . (January 11, 2010)

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