Bernie Sanders: Put Wall Street Under Oath

The current economic crisis is often compared with the Great Depression, especially when it comes to making calls for rapid and sweeping responses to the mess that has been made by Wall Street bankers and speculators.

But what is not so frequently noted is that Franklin Roosevelt and his congressional allies did not merely act. They also investigated wrongdoing and pointed fingers of blame at the practices and practitioners that created the crisis.

The powerful Senate Banking and Currency Committee, prodded by its brilliant chief counsel, a New York prosecutor named Ferdinand Pecora, unearthed and revealed what the New York Times referred to as "a secret financial history of the 1920s, demystifying the assorted frauds, scams and abuses that culminated in the 1929 crash."

Roosevelt and the congressional leaders with whom he was aligned left no doubt that they thought Percora's eyes-wide-open examination--which actually began during the waning days of the failed presidency of Herbert Hoover, the man FDR swept from office--was an essential part of making a clean break with the thoughts and deeds that led to the collapse of the stock market, the shuttering of banks, factory closings, farm foreclosures and mass unemployment.

In his first inaugural address, Roosevelt indicted the bankers and speculators, declaring that:

Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

As the current crisis has unfolded, there has been plenty of action -- much of it misguided -- but little in the way of accountability.

This imbalance -- which FDR, Ferdinand Pecora and their allies so wisely recognized as dangerous folly -- may be changing, however.

Congress, having failed to establish a staisfactory system for monitoring the expenditure of last fall's $800 billion Wall Street bailout at a point when it might have been able to require a measure of responsibility on the part of the Treasury Department and the beneficiaries of its largesse, is now endeavoring to determine how the money is being spend.

That makes sense.

But a key senator is bluntly declaring that it would make even more sense -- at a point when allocated funds are being spent and more allocations are being requested -- to try and determine how the crisis was created.

That's what Vermont Senator Bernie Sanders, whose track record of demanding accountability stands him in stark contrast from most of his colleagues, is suggesting.

"We have an enormous responsibility to explain to the American people what led to this financial crisis, how did we get here, who is responsible, and what we can do to make sure that this never happens again," Sanders wrote in a letter sent Friday to Senate Majority Leader Harry Reid, D-Nevada. "In order to accomplish this very important goal. We need to examine what responsibility should be borne by individuals, corporations, and institutions for the poor decisions and foolish investments that have in large measure created this monumental crisis."

The Vermont Independent is proposing that the congressional oversight panel charged with examining the Troubled Asset Relief Program (TARP), which is chaired by Harvard University Law Professor Elizabeth Warren, should expand the scope of its investigation so that it can study the causes of the economic collapse.

"The TARP Oversight Panel is already in place," explains Sanders, the steadiest Senate critic of wasteful TARP spending and irresponsible bailout schemes. "A sensible next step would be to expand its charge from that of scrupulously examining how the TARP monies are spent, to also exploring why the financial crisis occurred in the first place. The panel should have subpoena power necessary to assure that it receives sound information and direct answers to the questions it is charged with answering."

Seventy-five years ago, in another time of economic turmoil, Ferdinand Pecora said he "put Wall Street under oath."

He did so with the backing of new president and a courageous Congress.

Bernie Sanders proposes to renew the investigation.

Barack Obama and Harry Reid should support Sanders and give Elizabeth Warren the charge and the authority to put Wall Street under oath once more.

Comments (32)

1. Great!

   When it actually happens, it might be useful.

   I just worry a bit that it's Bernie Sanders and Mr Nichols and their track record of success on actually accomplishing these proposals.

   Getting Rove to be sworn may be easier!

   Posted by Mask at 01/30/2009 @ 3:16pm

2. Go, Bernie!

   Persist, persist.

   Put the Dems' feet to the fire.

   Put the Wall St thugs in the same position the repugs put Bill Clinton. Tell the truth under oath & you're damned. Tell lies, and you're charged with perjury.

   And support Barney Frank's bill to get back the billions in bonuses filched from bailout $$$.

   Posted by sloper at 01/30/2009 @ 3:26pm

3. Certainly, fraud and corruption were a factor, but a look at globalization as a causal factor should also be investigated. This was and is a system failure!

   Posted by P. J. Casey at 01/30/2009 @ 3:39pm

4. Undemocrat members of congress are working hard with your best intrest at heart! Here is how they are slaveing over the recession problem;

   Six Democratic members of Congress enjoyed a Caribbean junket sponsored by Citigroup after Congress had approved the $700 billion bailout of financial services firms in October.

   The National Legal and Policy Center, a watchdog group, has asked Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, for a formal review of the Citigroup's sponsorship of the trip by House Ways and Means Committee Chairman Charles Rangel and five others.

   The NLPC says the trip violated House rules.

   The purported purpose of the Nov. 6-9 junket was to attend the Caribbean Multi-Cultural Business Conference on the island of St. Maarten, but "the primary purpose of attending for most participants appeared to be to take a vacation," according to the NLPC, which had a representative at the event.

   The NLPC said in a statement: "The ‘lead sponsor' was Citigroup, which contributed $100,000. Citigroup was certainly aware that it would be a major recipient of bailout funds. It was also aware that its fortunes had become increasingly reliant on Congressional actions.

   "Citigroup should have also been aware that corporate sponsorship of such an event was banned by House rules adopted on March 1, 2007, in response to the [lobbyist Jack] Abramoff scandal and the infamous golf trip to Scotland."

   In addition to Rangel, other members of Congress who attended were Donald Payne of New Jersey, Sheila Jackson-Lee of Texas, Carolyn Cheeks Kilpatrick of Michigan, Bennie Thompson of Mississippi, and Donna Christensen, the delegate to the House from the United States Virgin Islands.

   Makes you feel warm all over doesn't it?

   Posted by comancheamerican at 01/30/2009 @ 3:59pm

5. globalization is an irreversible fact but not the cause of the financial meltdown.

   the problem started with the housing bubble, and was ratcheted up by the derivatives swindle. had the housing bubble not burst, the increase in value of the mortgages would have covered the losses and we would still be in the pink.

   it is the banks, and most of all the watchdogs, who pronounced garbage to be gold, that are at fault.

   Posted by emile duBois at 01/30/2009 @ 4:05pm

6. So what did the regressives do to get us back into the depression:

   "The "First New Deal" of 1933 was aimed at short-term recovery programs for all groups. The Roosevelt administration promoted or implemented banking reform laws, emergency relief programs, work relief programs, agricultural programs, and industrial reform (the National Recovery Administration, NRA), and the end of the gold standard and Prohibition.

   A "Second New Deal" (1935–36) included labor union support, the Works Progress Administration (WPA) relief program, the Social Security Act, and programs to aid farmers, including tenant farmers and migrant workers. The Supreme Court ruled several programs unconstitutional; however, most were soon replaced, with the exception of the NRA.

   Most of the relief programs were shut down during World War II by the Conservative Coalition (i.e., the opponents of the New Deal in Congress). Many regulations were ended during the wave of deregulation in the late 1970s and early 1980s. Several New Deal programs remain active, with some still operating under the original names, including the Federal Deposit Insurance Corporation (FDIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence today are the Social Security System, Securities and Exchange Commission (SEC), and Fannie Mae."

   Oh yeah, undid what fixed the last one...

   Posted by hsuBfools at 01/30/2009 @ 4:20pm

7. Posted by hsuBfools at 01/30/2009 @ 4:20pm | ignore this person | warn this person

   you double dipping? c'mon.

   Posted by emile duBois at 01/30/2009 @ 4:33pm

8. A two-fer... in reverse maybe?

   Yeah, ok.

   How about ststs or polls?

   Posted by hsuBfools at 01/30/2009 @ 4:55pm

9. your contributions are valued by me and others. keep up the good work.

   Posted by emile duBois at 01/30/2009 @ 5:22pm

10. Er, kinda like the drunk-driver running over a crowd of people...

    Ponzi schemes wiping out peoples life savings, fraud, intoxicated with unregulated avenues, driving real funds beyond the legal boundaries, cooked the books...

    Uhmmmm, sounds bad when you actually consider what really happened.

    Posted by hsuBfools at 01/30/2009 @ 5:38pm

11. I have little sympathy for folks who lost their shirts in Ponzi schemes. they were greedy and lost. tough luck.

    Posted by emile duBois at 01/30/2009 @ 5:55pm

12. Ponzii are still illegal and perp's should go to jail. As for the vic's, there's at least civil court if the rock's spongeabliness... is dry.

    Posted by hsuBfools at 01/30/2009 @ 6:18pm

13. and the press prints on..........

    Posted by frosty zoom at 01/30/2009 @ 7:50pm

14. you find out about ponzi schemes when they go bust. they go bust when there is no more money coming in. there is seldom, if ever, anything left.

    Posted by emile duBois at 01/30/2009 @ 8:08pm

15. Curious, what crime specifically do "poor decisions and foolish investments" fall under?-----Posted by lvliberty1 at 01/30/2009 @ 4:58pm

    The Iraq War?

    Posted by Mask at 01/30/2009 @ 9:04pm

16. And blatant, intentional fraud against the average person and investor, too.

    Posted by Kristev at 01/30/2009 @ 10:18pm

17. Did anyone even check how many more highly leveredged mortgage based securities are being held by the banks before shoveling TARP money at them?

    The sub-prime classification were the first homeowners to have their teaser rates run out. Alt A class loans have grace periods of a year or two longer than a sub-prime loan.

    It's like they're bailing water out of a canoe that's heading towards niagra falls.

    Posted by koroviev at 01/31/2009 @ 12:19am

18. Re. your unauthorised overdraft

    Dear Western banking establishment,

    I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore your largest shareholder I would be grateful if you could repay this facility at your earliest convenience. I have charged you an additional £30 for this letter and a monthly unauthorised overdraft fee of £28. If you do not repay this facility shortly I will have no choice but to become further massively impoverished along with legions of fellow taxpayers for multiple generations to come.

    http://thepriceofeverything.typepad.com/

    the_price_of_everything/2009/01/

    an-open-letter-to-the-western-banking-establishment.html

    Posted by frosty zoom at 01/31/2009 @ 12:37am

19. "The general shape of this universal delusion [that is, credit] may be indicated by three of its familiar features.. First, the idea that the panacea for debt is credit.. The burden of Europe's private debt to this country now is greater than the burden of her war debt; and the war debt, with arrears of interest, is greater than it was the day the peace was signed.. Debt was the economic terror of the world when the war ended. How to pay it was the colossal problem. Yet you will hardly find a nation, state, city, town or region that has not multiplied its debt since the war. The aggregate of this increase is prodigious, and a very high proportion of it represents recourse to credit to avoid payment of debt.

    "Second, a social and political doctrine, now widely accepted, beginning with the premise that people are entitled to certain betterments of life. If they cannot immediately afford them.. nevertheless people are entitled to them, and credit must provide them.. Result: Probably one half of all government, national and civic, in the area of western civilization is either bankrupt or in acute distress from having over-borrowed according to this doctrine.. Now as credit fails and the standards of living tend to fall from the planes on which credit for a while sustained them, there is political dismay.. When [people] have been living on credit beyond their means the debt overtakes them. If they tax themselves to pay it, that means going back a little. If they repudiate their debt, that is the end of their credit. In this dilemma the ideal solution, so recommended even to the creditor, is more credit, more debt.

    Posted by frosty zoom at 01/31/2009 @ 12:40am

20. "Third, the argument that prosperity is a product of credit, whereas from the beginning of economic thought it had been supposed that prosperity was from the increase and exchange of wealth, and credit was its product."

    Posted by frosty zoom at 01/31/2009 @ 12:40am

21. http://www.mises.org/books/bubbleworld.pdf

    the bubble that broke the world

    by garet garrett, 1931

    Posted by frosty zoom at 01/31/2009 @ 12:48am

22. As American credit was loaned to European nations in amounts rising to more than a billion a year, in the general name of expanding our foreign trade, the question was sometimes asked: "Where is the profit in trade for the sake of which you must lend your customers the money to buy your goods ?"

    The answer was: "But unless we lend them the money to buy our goods they cannot buy them at all. Then what should we do with our surplus?"

    hmmmm.......

    sound familiar?

    Posted by frosty zoom at 01/31/2009 @ 12:52am

23. Has anyone heard of the Fifth Ammendment in the unlikely event things would get messy?

    By the way what about most of Obama's economic team, past and present, Bill (repeal Glass-Steagall for small change [and great cost] from Citibank's Sandy Weill) Clinton and the other four U.S. officials named by Julia Finch in the 1/26/09 London Guardian along with most of the rest of the U.S. Government, regulatory agencies, and the intellectual demimondes who spew economic nonsense from their sacred bagnios aka think tanks in order to sell their snake oil to the 50% of the American Public which has been effectively functionally illiterate since at least 1992 and as many of the rest as possible, most of whom are on the margin in some sense anyway, to name some of the others.

    Do you really believe that the real puppet masters, procurers, and peddlers will be called to account and not just an endless parade of marionettes?

    Anna Rochester we need you again very badly, along with Grace.

    Art Yeske

    Posted by Joe Smith 9 at 01/31/2009 @ 01:00am

24. "Then one by one the international bankers appeared before committees of inquiry of the United States Senate, all saying they thought the bonds were good and all alike disavowing further responsibility. They had not guaranteed the bonds or the validity of them. They were not responsible for how the money was spent or misspent; the borrowers were responsible. And as for the foreign bond delirium in this country, that was something the people, that is to say, the private investors, had done to themselves.

    Posted by frosty zoom at 01/31/2009 @ 01:11am

25. Has anyone heard of the Fifth Amendment in the unlikely event things would get messy?

    By the way what about most of Obama's economic team, past and present, Bill (repeal Glass-Steagall for small change [and great cost] from Citibank's Sandy Weill) Clinton and the other four U.S. officials named by Julia Finch in the 1/26/09 London Guardian along with most of the rest of the U.S. Government, regulatory agencies, and the intellectual demimondes who spew economic nonsense from their sacred bagnios aka think tanks in order to sell their snake oil to the 50% of the American Public which has been effectively functionally illiterate since at least 1992 and as many of the rest as possible, most of whom are on the margin in some sense anyway, to name some of the others.

    Do you really believe that the real puppet masters, procurers, and peddlers will be called to account and not just an endless parade of marionettes?

    Anna Rochester we need you again very badly, along with Grace.

    Art Yeske

    Posted by Joe Smith 9 at 01/31/2009 @ 01:14am

26. When the delusion breaks, people all with one impulse hoard their money, banks all with one impulse hoard credit, and debt becomes debt again, as it always was. Credit is ruined. Suddenly there is not enough for every- day purposes. Yet only a little while before we had been saying and thinking there was a great surplus of American credit and the only thing we could do with it was to export it. How absurd it sounds in echo. It was absurd at the time.

    Posted by frosty zoom at 01/31/2009 @ 01:36am

27. oink!

    http://econospeak.blogspot.com/2009/01/stimulus-pork.html

    Posted by frosty zoom at 01/31/2009 @ 01:53am

28. "People are not stupid," Mr. Zedillo said. "They see the huge deficit, the huge spending, and wonder what comes next."

    Posted by frosty zoom at 01/31/2009 @ 01:57am

29. Uh,,what statute of the law Mask?

    Posted by lvliberty1 at 01/31/2009 @ 12:12pm

    the word of god, you moron.

    Posted by frosty zoom at 01/31/2009 @ 11:18pm

30. God Bless Bernie Sanders. We need more independents and fewer party hacks.

    Posted by tmatson at 02/01/2009 @ 05:25am

31. We do not need to give the benefit of the doubt to the banks while this is studied.Ten cents on the dollar for the non-conforming loans.The banks then debit DIVIDENDS RECEIVABLE for ninty cents and cash for ten cents.The Treasury then creats the DISORDERED BANK with the mortgages and will pay dividends to the banks with the profit.

    Posted by worker-bee at 02/02/2009 @ 12:10am

32. Save the Republic !!

    Posted by hugocervantes at 02/03/2009 @ 4:21pm