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Financial Crisis Panel Starts Today; Should the Banking Industry Worry?

The 10-member commission appointed by Congress to investigate the causes of the nation’s financial meltdown holds its first meeting this morning. But with momentum for stronger regulation of Wall Street slowing and New York emerging as the center of bailout accountability, the commission may have to forgo Washington’s traditional deliberative instinct in order to succeed.

One possible obstacle to moving quickly: many members of the commission have close ties to the elite financial institutions that played a central role in the crisis, and several are known as dogged supporters of the political party that named them to the panel. Will the inquiry truly turn over every rock and question every tight-lipped bank executive? We could begin to see the answer today. In the meantime, let’s meet the investigators.

Phil Angelides: The commission’s chairman was most recently in public view as the Democrats’ 2006 nominee for California governor, but he has vowed to use famed 1930s financial investigator Ferdinand Pecora as a model and pursue a non-partisan, just-the-facts approach. Angelides’ first test may be the reluctance of White House or Wall Street officials to abide by subpoenas for testimony; such refusals became a problem for the 9/11 Commission in its early days.

Bill Thomas: During his years as GOP chairman of the influential House Ways and Means Committee, Thomas earned a reputation as a brilliant and fierce combatant in the fight for broad deregulation of industry. He voted for the Gramm-Leach-Bliley Act that allowed banks to amass unprecedented amounts of risk, and he raised $1.8 million from the financial industry during his political career.

Brooksley Born: This former chairwoman of the Commodity Futures Trading Commission became a folk hero of sorts after the economy began its free fall, when her struggle to regulate the shadowy world of derivatives trading burst into public view. Born lost the battle she waged in the late 1990s with then-Fed chairman Alan Greenspan and Larry Summers, then and now a senior White House economics adviser. But she could well be the most vocal commission member when it comes to unmasking the government’s failure to guard against financial risk – because she had a front-row seat.

John W. Thompson: Formerly chairman of the high-tech company Symantec, Thompson was singled out by the Center for Responsive Politics as the commission’s most prolific political campaign donor. During the 2008 cycle alone, he and his wife gave more than $405,000 to Democratic candidates.

Sen. Bob Graham (D-Fla.): This former chairman of the intelligence committee is no stranger to bank-industry cash, raising $2.1 million from financial firms during his career.

Keith Hennessey: This former economic adviser to President George W. Bush could be a witness for the panel, were he not a member. Hennessey joined the White House in late 2007, and he told Foreign Policy magazine last month that few on the president’s team saw the financial crisis coming until it hit in mid-2008.

Byron Georgiou: Based in Las Vegas, Georgiou is an attorney whose firm represents shareholders in several lawsuits filed against bailed-out banks, including Morgan Stanley and Bear Stearns.

Douglas Holtz-Eakin: After heading the non-partisan Congressional Budget Office during the GOP’s years in control of Congress, Holtz-Eakin left to start his own private consulting firm and serve as a senior economic adviser to Sen. John McCain’s (R-Ariz.) presidential campaign last year. Whether the CBO-era Holtz-Eakin or the more partisan McCain-era Holtz-Eakin will emerge should be interesting to watch as the commission digs deeper into the crisis.

Peter Wallison: This GOP appointee, a longtime fellow at the American Enterprise Institute, has already claimed to have uncovered the cause of the financial crisis – Fannie Mae and Freddie Mac’s role in helping low-income homeowners obtain mortgages. While Fannie and Freddie were certainly not blameless, Wallison’s narrative is shared almost exclusively by other conservatives.

Heather Murren: Named to the commission by Senate Majority Leader Harry Reid (D-Nev.), Murren is a veteran managing director at Merrill Lynch, the firm that paid out $3.6 billion in bonuses in the final days before its shotgun wedding with Bank of America.

With the commission stacked with so many of its friends, the financial industry is likely breathing a little easier than it was when the panel was proposed in April.

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