WASHINGTON — Phil Angelides wants some answers: With millions of Americans out of work and millions losing their homes, why is Wall Street is having a record year, with record profits and record bonuses for top executives?
As the chairman of the Financial Crisis Inquiry Commission, Angelides has a good perch to ask his questions. It's a special panel similar to the 9/11 Commission, charged with writing the official history of what caused the nation's financial systems to fall apart in 2008.
"We'll follow the evidence wherever it leads," Angelides said Wednesday as the 10-member bipartisan commission kicked off its first public hearing on Capitol Hill.
Angelides took square aim at the nation's top bankers, grilling executives from Bank of America Corp., Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co.
He said the public was right to be angry with the bankers, and he vowed to get his answers. He's armed with subpoena power and more than 30 newly hired staff members to get the job done.
Angelides, 56, is a Sacramento, Calif., native who's been a prominent player in the state's politics. A millionaire Sacramento businessman and developer, he's a major Democratic contributor who served as state treasurer from 1999 to 2007 and ran for governor in 2006, only to be trounced by Arnold Schwarzenegger.
Angelides, appointed to his new position by Democrats House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, said the commission would conduct a yearlong "full and fair inquiry into what brought America's financial system to its knees."
He said the commission faced a "daunting and complex" assignment and that it expected to interview hundreds of witnesses. A report is due in December.
"We'll use our subpoena power as needed," Angelides said. "And if we find wrongdoing, we will refer it to the proper authorities. That's what the American people want. That's what they deserve. And that's what this commission is going to give them."
Angelides wasted no time Wednesday in putting bankers on the hot seat, and the executives were quick to acknowledge their role in the financial collapse.
He reserved some of his toughest questioning for Lloyd Blankfein, the chairman of the board and chief executive officer of Goldman Sachs. Angelides scolded the company for escaping the worst of the subprime mortgage crisis by selling $40 billion in securities backed by risky home loans while betting that the housing market would plummet.
"I'm just going to be blunt with you," he told Blankfein. "It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars. It doesn't seem to me that that's a practice that inspires confidence in the market."
Blankfein acknowledged that his company had engaged in improper behavior, adding that he regrets "the consequence that people have lost money in it."
Commission members said a big part of their job would be to try to explain the crisis to the public in the simplest terms possible. Angelides has had no shortage of analogies.
Talking up his job in a recent speech in Washington, Angelides said an accounting of the financial industry was "desperately needed." He noted the difference between today and the financial crash of 1929, when people were "throwing themselves out the windows" on Wall Street.
"This year, they're lining up for bonuses," Angelides said. "There has been no serious self-examination on Wall Street of what has occurred and what should be in the future. I liken it to someone who has had a significant heart attack, who was a bad eater, a drinker, no exercise. Three weeks later, they're feeling better, and the fact is that the fundamental problems still remain. And so now is the time, I believe, for self-examination."
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