The Politics of Pecora

If there's one thing that everyone seems to agree on, it's that the current financial crisis is complicated. There's two problems with this. First, it's not, fundamentally, true. The causes for the crisis are fairly simple when you strip away the artifice and lingo. (Most notably an $8 trillion housing bubble that the financial over-class insisted wasn't a bubble.) But more importantly, the perceived complexity of the issues are being cynically manipulated by those responsible to stem the tide of popular anger and insulate themselves from the wholesale reforms that are necessary.

In a piece on the bailout, Matt Taibbi referred to this posture of condescension as the "eye-roll." As soon as you ask a question -- why did you think housing prices would go up forever -- you are treated to the eye-roll which is the posture of those in power to the supposed ignorance and idiocy of those attempting to figure out just how they broke the world.

The point is that complexity has an enervating affect on the polity: people can only marshal anger and action about the crisis if they feel that at some basic level they understand it. Before we have politics, or a broad call for reform, we must have some broadly shared understanding of what went wrong and who's responsible. That's why a new Pecora Commission is so vital.

The original commission was created during the Great Depression as a fact-finding enterprise, to figure out how things could have gone so wrong. The hearings attracted tremendous attention and their uncovering of the self-dealing and corruption on Wall St. laid the ground work for future regulatory reforms.

The Obama administration has attempted to skip first step of this process. They've brought together the relevant stakeholders to craft a plan for financial reform, but have bypassed the necessary step of educating the public on their stake in the reform fight's outcome.

Unless and until the public feels knowledgeable enough to get angry, to fight for specific policies and solutions, the crafting of a new financial order will be left to the existing players. And they are sure to tip the scales in their favor and endanger the entire economy all over again.

If we've learned one thing in this decade, it's how dangerous it is to allow elites to make decisions based solely on conversations they have with themselves. A new Pecora Commission holds out the promise of giving the public a voice.

Comments (29)

1. Obviously the cause of the housing crises is very simple...

   Barney Frank and Chris Dodd using magical minority-in-the-Congrss powers set the agenda back in 2003-2004, despite Dubya and Hastert and Frist's valiant efforts to reform Freddie and Fannie.

   Oh, and Maxine Waters too.

   Posted by Mask at 07/13/2009 @ 12:23pm

2. There is just too much corporate influence over Washington to ever let the truth come out in a meaninful manner. If it is as simple as one author would suggest. Housing bubbles happen. In California they happen about once every 7-8 years, why was this one so much worse? If it is simple please explain. While you may wish it to be simple does not make it so. I am open to hearing the truth that cuts through the obfuscations. Do you hold it?

   I seriously doubt that one commision could have much of any sway. They are so easily over shadowed if the corporations spend enough money. While a commision may be a good path to some truth, there is no reason to believe that it will sway the public anymore than billions in advertising.

   Posted by Extraneous at 07/13/2009 @ 12:45pm

3. HAYES: "Unless and until the public feels knowledgeable enough to get angry,...."

   Hey, young Christopher.....as usual, the "public" is ahead of the Gubbers!

   The "public" knows the problem.....the Do-Gooders' promotion of home ownership for favored constituents by whatever means.

   I read some commentary this morning that was brilliant in the most simple way. There is no such thing as true financing innovation.....it's always going to boil down to paying for it NOW or LATER and paying it yourself or have someone else pay for it!

   The Dems and Gubbers in general, are masters of the `pay LATER and mandate someone else pay' financing strategy.....except they always want the votes, NOW!

   Posted by Happy at 07/13/2009 @ 1:39pm

4. Posted by Happy at 07/13/2009 @ 1:39pm

   You tell 'em, HAPP......isn't it awful the way the Government and Democrats got rich off all those bad loans.

   If only the banks and financial insitutions hadn't been handcuffed, they might have stopped them as all good, decent capitalists would do!

   Posted by Mask at 07/13/2009 @ 1:42pm

5. LOL

   oh yeah, the complexity is NOT in identifying what went wrong and why...

   its the butt covering attempts of the insiders to explain without taking personal responsibility nor reexamining ideological assumptions that enabled the mess.

   the complicated part is trying to defend a failed system and use its mechanisms to correct a problem the failed system caused.

   runaway train...

   Posted by ibbleblibble at 07/13/2009 @ 2:20pm

6. Great idea ... okay, so who's the new Pecora?

   Kucinich? Doesn't have the seniority & the corporate-owned media would treat him as investigator the way they treated Kucinich the candidate, occasional ridcule, but mainly ignore.

   And GoldmanSachs tell us they made a profit of $2 billion in Q2 '09. Cue media applause, congressional & White House silence.

   Posted by sloper at 07/13/2009 @ 2:45pm

7. Posted by sloper at 07/13/2009 @ 2:45pm

   Can't check this out myself for now, so if anyone else could see if a member of either the Populist Caucuse or the Progressive Caucus is a senior member of one of the appropriate oversight committees in the House, you could answer Sloper's question about who might be this era's Pecora.

   Posted by cka2nd at 07/13/2009 @ 3:11pm

8. If we've learned one thing in this decade, it's how dangerous it is to allow elites to make decisions based solely on conversations they have with themselves.

   Yep, that is the Obamanation that makes desolation and the Demoncrat congress in a nutshell! I could not agree more!

   Posted by BigPasture at 07/13/2009 @ 3:51pm

9. And here, the chairman of the Peccary Commission:

   en.wikipedia.org/wiki/File:Collared_peccary02_-_melbourne_zoo.jpg

   Posted by schnellerheinz at 07/13/2009 @ 4:26pm

10. Takes one to know one, heh.

    Posted by schnellerheinz at 07/13/2009 @ 4:28pm

11. the first impulse of many on the left seems to be to establish a commission or an endless committee....

    The Nation writers appear to be undergoing summer writer's block...the threads are about as exciting as, well a leftist convention.

    Posted by antisocialist at 07/13/2009 @ 5:01pm

12. Democrats and Republicans share blame equally for their policies of the last 30 years. The burst housing bubble was merely the proximate cause of our current economic woes. Without an industrial/manufacturing base, there is no appreciable economy to "recover". We've been steadily shipping jobs to third world countries since the Reagan era.

    Irresponsible housing lending -- and borrowing -- practices simply delayed the inevitable for a few years and created the illusion that an economy entirely based on "service" was somehow viable.

    Wal-mart cannot make a profit indefinitely selling to Target employees, who in turn make a profit selling to Best Buy employees, who make a profit selling to Wal-mart employees, like some kind of perpetual motion machine -- particularly when none of them are selling goods made in this country.

    This is the "global" economy at work.

    Posted by Nexus at 07/13/2009 @ 5:41pm

13. Posted by IlyaKuryakin at 07/13/2009 @ 3:06pm

    Feel free to tell us how to fix things up. Or, do you prefer the sideline of the bitter fringe?

    Posted by twillie at 07/13/2009 @ 6:32pm

14. "Obviously the cause of the housing crises is very simple... Barney Frank and Chris Dodd using magical minority-in-the-Congrss powers set the agenda back in 2003-2004, despite Dubya and Hastert and Frist's valiant efforts to reform Freddie and Fannie. Oh, and Maxine Waters too." Posted by Mask at 07/13/2009 @ 12:23pm

    Mask, mask, mask. As people from both ends of the political spectrum have said, there is plenty of blame to go around. Frank and Dodd don't get a free pass just because they were in the minority.

    From wsjonline:

    "But the housing bubble only burst after government subsidies pushed house prices up so fast that marginal buyers could no longer afford to chase prices even higher. A bubble created by rigged financial markets and a government-sponsored obsession with home ownership is not a result of market failure, but rather, a result of bad public policy."

    And who are the policymakers? The geniuses in the executive and legislative branches dating back to Clinton.

    Everything will be OK though. I'm sure a new Committee can get to the bottom of it, and settle on a whole new group of government policies that will keep this from EVER HAPPENING AGAIN.

    Posted by twillie at 07/13/2009 @ 9:24pm

15. "As for me, I have nearly paid off the condo in Caracas, and already have beachfront property on Isla Margarita to while away my time building shit, getting trashed on $1 beers and staying healthy(?) on $2 lobsters. And guess what? IF i get sick, or need medication, or have a toothache, or wanna take another university degree, it will only cost me....nothing. And filling up my Land Cruiser will cost about $2.40 cuz' fuel is Twelve Cents a gallon."----Posted by IlyaKuryakin at 07/14/2009 @ 05:47am

    Really sounds like Ilya is going to be "one of the people" down in Venezeula, huh?

    Can you imagine how this guy is going to be telling his housekeeper (who he's paying $1 a day) how he "supports her plight as one of the imperialist-oppressed proletariat"?...LOL

    Posted by Mask at 07/14/2009 @ 07:55am

16. Mr Hayes,

    This sentence sums it all up nicely. "Unless and until the public feels knowledgeable enough to get angry, to fight for specific policies and solutions, the crafting of a new financial order will be left to the existing players."

    That is why Larry Summer And Timmy Geithner are on the job. Two inside guys who are part of the crowd they are supposed to be policing.

    I voted for Obama but as soon as he appointed those two clowns I immediately started questioning his motives for such an appointment. It didn't make any sense to appoint the architect of deregulated system and his blind sidekick to fix the problem.

    Now, we are already hearing the early warnings of a possible second infusion of cash though Geithner tells us the U.S. economy is on the mend. Who's economy is on the mend is more the question. Sure, Goldman Sachs is doing better but most Americans are being squeezed so Goldman Sachs can do better at our expense....but of course they all deserve their bonuses for doing so a slam bang job the last 3 or 4 months.

    Where the f*&^ are our bonuses for bailing the miserable thugs out!!! The answer to any bonuses on the feds dime should be a loud and clear "HELL NO"!

    Posted by Wolfgang1 at 07/14/2009 @ 09:16am

17. Sorry, should be

    such a slam bang....

    Posted by Wolfgang1 at 07/14/2009 @ 09:18am

18. Sure, Ilya, sure.

    "Condos"? "Beachfront property"?

    Just one of the "working class fighting the oppression of the bourgeoisie", aren't ya?

    Posted by Mask at 07/14/2009 @ 09:38am

19. Sure, Ilya, sure.

    "Condos"? "Beachfront property"?

    Just one of the "working class fighting the oppression of the bourgeoisie", aren't ya?

    Posted by Mask at 07/14/2009 @ 09:38am

    Hey Mask,

    Ilya kind of reminds me of Chimi, don't you think?

    Posted by antisocialist at 07/14/2009 @ 11:12am

20. "Ilya kind of reminds me of Chimi, don't you think?"-------Posted by antisocialist at 07/14/2009 @ 11:12am

    Lots of HINTS to point in that direction.....Venezuela instead of Colombia. Foul temper. Sanctimony mixed with "limousine liberal at home with the struggle of the peasants" in Latin America.

    It does sound familiar, doesn't it?

    Posted by Mask at 07/14/2009 @ 11:40am

21. Hey, I'm sure it will work out well for Ilya. Until El Presidente decides that all beachfront property needs to be "returned to its rightful owners, the brave peasants of Venezuela".

    Ilya- Ever hear of Robert Mugabe?

    Posted by twillie at 07/14/2009 @ 8:52pm

22. BTW...

    "If we've learned one thing in this decade, it's how dangerous it is to allow elites to make decisions based solely on conversations they have with themselves. "---Posted by BigPasture at 07/13/2009 @ 3:51pm

    You mean like neo-cons and the Iraq War?

    Posted by Mask at 07/15/2009 @ 07:54am

23. Posted by Happy at 07/13/2009 @ 1:39pm |

    Sure, Happ, all those po black folk loaded up on derivatives and managed off-balance-sheet structured investment vehicles all while duping the unwashed bond ratings agencies into believing that gaussian copula were just a new dance craze.

    You betcha, simpleton.

    Each person getting a visit from the sheriff and watching their home go to schmucks like you in a trustee sale made 1 mistake.

    Bank of Lynching America, CountryWide (that's how we'll spread ya), and even Fannie/Freddie made the same mistake...MILLIONS OF TIMES.

    Put that in your no-doc, interest-only, subprime bundle and smoke it.

    Posted by snowball777 at 07/15/2009 @ 11:58pm

24. If we've learned one thing in this decade, it's how dangerous it is to allow elites to make decisions based solely on conversations they have with themselves. Yep, that is the Obamanation that makes desolation and the Demoncrat congress in a nutshell! I could not agree more! Posted by BigPasture at 07/13/2009 @ 3:51pm |

    Right disease, but you forgot The Decider and his Merry Band of Loyal Bushies; same problem, different asshats.

    Posted by snowball777 at 07/16/2009 @ 12:00am

25. I'm moving there to get AWAY from you idiots - not to Emulate YOUR behaviour. Posted by IlyaKuryakin at 07/14/2009 @ 09:35am |

    "...I have nearly paid off the condo in Caracas, and already have beachfront property on Isla Margarita... "

    "...filling up my Land Cruiser will cost..."

    "The killer tan?..."

    "...allegiances are worthless..."

    Self-righteousness: FAIL.

    Posted by snowball777 at 07/16/2009 @ 12:29am

26. Yes, a new Pecora Commission would be helpful. Don't hold your breath however. Lacking that, a clear explanation here would help. But what got us here, would include an explanation of how globalization has worked, and a history of bubbles that did not begin with housing. Could provide the basis for an alternative progressive political economy.....

    Charlie M.

    Posted by cmsandia at 07/16/2009 @ 3:20pm

27. I cannot agree more with the article. We have suffered a dictatorship from financial sectors seems now from many years since. That in the name of a capitalism without justice and human face.

    They know how banks operate, how should credit cards be managed, what is reasonable profits and of course they set for themselves their rights to heavy salaries and bonuses. They are used to devour for them all the richness and growth that society might create. Specially when it is not real growth, but bubble economics.

    We, the great public, seem to be less than ignorant. We cannot see how the system really works! Controls will just jeopardize our economy. That will make us socialistic and demoniac. And I say: Is this not the same argument they use when criticizing government intervention in the economy? They say government should not intervene because it is a rule maker and therefore should not be an agent that benefits from its rule making? Is it not the same what they do over there in the banks?

    What strikes me so much is how detached they really are from the great public, the real and great American people. They must know by now that the only thing they are fulfilling with their actions is to kill the purchasing power of Americans drop by drop, and by doing so they are killing our market power and America itself.

    Posted by Frank42 at 07/17/2009 @ 12:37am

28. Fortunately, it is Friday, and so I get to put on my rose colored glasses. Will this committee actually have the wherewithall to be honest and accurately report findings, or will they sugarcoat and BS their way through anything that looks to cast a dispargaging word on Big Business, et al who were making tons of money.

    I am perpetually amused by Commissions. The last was the 9/11 commission and what happened? GWB said thank you very much and ignored it (in much the same way that AGonzales ignored the DOJ).

    In this instance, there is too much political and financial behavior at risk for those on this Commission to actually be honest. As some members on the Commission are politicians, I doubt that they will do anything to anger their cohorts or their own re-election.

    So to me, the bottom line is that MONEY talks to politicians and NO ONE from either political party want to deter those with dollars to be "embarrassed" by this report. Probably a waste of taxpayer dollars!

    Posted by afisher at 07/17/2009 @ 2:55pm

29. With all the debate about "reforming" the economic system that created the financial crisis in the United States, one word appears to be totally absent in the discussion, that is "morality". Apparently, a moral economic system does not fit into so-called "rational" analysis and conclusions.

    Posted by mraymo5 at 07/18/2009 @ 2:22pm