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Is Ferdinand Pecora Rolling Over in His Grave?

Posted by Larry Doyle on November 19, 2010 6:57 AM |

Where are our statesmen?

Where are the individuals who would choose to sacrifice personal gain for our national welfare? I am not talking about mere public policy implementation. I am talking about those who would choose to pursue and embrace the truth while exposing the incestuous Wall Street-Washington relationship that has brought our nation to its knees.

Where is today’s Ferdinand Pecora when we need him? I shudder to think that the great Pecora, who led the investigation of Wall Street practices which brought on the Great Depression, might be rolling over in his grave right now. Why’s that?

Reports released yesterday indicate that the Financial Crisis Inquiry Commission (FCIC), this generation’s Pecora Commission, is not exactly embracing Ferdinand’s ‘take no prisoners’ approach, but likely playing politics. Are you kidding me? America is brought to its knees and the commission charged with exposing the people and practices behind this devastation is locked in a political dogfight? While I am not surprised, I am enormously disappointed.

Perhaps the FCIC will surprise me and all of us, but for now my confidence level in the FCIC has dropped precipitously. While little attention is brought to this story in our domestic media, the Financial Times yesterday highlighted, Crisis Panel Delays Report Amid Rancor:

The Financial Crisis Inquiry Commission has delayed its report into the causes of the crisis amid rancour between members of the panel.

Set up by Congress as a version of the widely praised Pecora commission, which in the 1930s studied the causes of the Great Depression, the FCIC has told the White House it wants to delay publication of the report from December.

….the effectiveness of the investigation and whether all members of the FCIC will sign off on the final report when it is delivered in January is still in doubt.

In particular, Republican members have wanted more of a focus on the government’s role in the crisis and are concerned that Mr. Angelides, a Democratic appointee, is focusing too much on Wall Street’s role, according to people familiar with the committee.

Some have argued that the panel is yet to get into substantive discussion on the causes of the crisis and say they do not believe that will happen.

WOW. Is this the best America gets?

A nation brought to its knees and the commission charged with pursuing the truth after eleven months “is yet to get into substantive discussion on the cause of the crisis.” And people are surprised as to why The Tea Party is thriving? Boy, what would our friend Ferdinand have to say about this state of affairs? If only we could bring him back.

Well, let’s do the next best thing. Let’s go back and take a peek at the preface to Ferdinand Pecora’s book Wall Street Under Oath. As you read Pecora’s words, I would ask you to reflect upon today’s money-changers on Wall Street and also today’s financial policemen in Washington. Pecora wrote: 

Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the “wild bull market” of 1929 still give evidences of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back to pernicious activity. Frequently we are told that this regulation is throttling the country’s prosperity. Bitterly hostile was Wall Street to the enactment of the regulatory legislation. It now looks forward to the day when it shall, as it hopes, resume the reins of its former power.

(LD’s comment…please do not tell me that the Dodd-Frank financial regulatory reform will truly make an impact. Wall Street is already hard at work gutting the Volcker Rule to limit proprietary trading!!)

That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt. Indeed, if you now hearken to the oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured they had nothing to do with the misfortunes which overtook the country in 1929-1933; that they were simply scapegoats sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims.

These disingenuous protestations are, in the crisp of a legal phrase, “without merit.” The case against money-changers does not rest on hearsay or surmise. It is based upon a mass of evidence, given publicly and under oath before the Banking and Currency Committee of the United States Senate between 1933-1934, by The Street’s mightiest and best-informed men. Their testimony is recorded in twelve thousand printed pages. It covers all the ramifications and phases of Wall Street’s manifold operations. The public, however, is sometimes forgetful. As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the voices of The Street subtly pleading for a return ” to the good old times.” Forgotten, perhaps, by some are the shattering revelations of the Senate Committee’s investigations, forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in the good old days.

After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempts be made to abolish that post. It is in the hope of rendering this service, especially for the lay reader unfamiliar with the terminology and conduct of The Street, that the author has endeavored, in the following pages, to summarize the essential story of that investigation—an inquiry which cast a vivid light upon the unhabitated mores and methods of Wall Street.

Ferdinand Pecora
New York City
February, 1939

Larry Doyle

The FCIC NEVER responded to any of the details I shared with them on a wide array of topics. Do we know if the FCIC ever used its subpoena power?

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I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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