Commission Begins Documenting Financial Meltdown The Financial Crisis Inquiry Commission is examining what caused the nation's financial meltdown in 2008. The group's mission is to determine the root causes of the financial crisis and present its findings by the end of the year.

Commission Begins Documenting Financial Meltdown

Commission Begins Documenting Financial Meltdown

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The Financial Crisis Inquiry Commission is examining what caused the nation's financial meltdown in 2008. The group's mission is to determine the root causes of the financial crisis and present its findings by the end of the year.


This week, the commission held its first public hearings on Capitol Hill. The Planet Money team, Alex Blumberg and Chana Joffe-Walt, have this report on how the hearings went.

ALEX BLUMBERG: First off, Chana, this commission has its work cut out for it. Everyone had their own pet theory about what caused the crisis.

CHANA JOFFE: And the commission's charter seems to pay lip service to all of them. It says, and I'm reading here: The FCIC is charged with conducting a comprehensive examination of 22 areas of inquiry related to the financial crisis. Twenty-two.

BLUMBERG: Including, but not limited to, fraud and abuse in the financial sector, the global imbalance of saving and international capital flows, and the tax treatment of financial products and investments.

JOFFE: I really hope it's not that last one. If after a year of hearings and subpoenas and depositions they came out with a report that said, eh, it's the tax code, it would be a bit of a let down.


PHIL ANGELIDES: The meeting of the - oh good the mikes work. The meeting of the Financial Crisis Inquiry Committee Commission will come to order.

BLUMBERG: So that's Phil Angelides messing up the title of the commission he is chairman of. First up were the bankers. The heads of the four biggest banks on Wall Street - JP Morgan Chase, Bank of America, Morgan Stanley and Goldman Sachs.

JOFFE: And they had a plan. Number one, show you're apologetic. Number two, don't apologize for anything specific. Number three and most importantly, assure everyone things have changed, things are better now.

BLUMBERG: For example, Commissioner Heather Murren asked Lloyd Blankfein, head of Goldman Sachs, do you need more regulation? And he replied, well, we have a new regulator now, the New York Fed, and it's much more on the case than the one we used to have, the SEC.

LLOYD BLANKFEIN: I mean every day dozens of people from the New York Fed come in and they know every part of our business, look at papers, our processes, procedures in a very, very - our regulation is different now.

HEATHER MURREN: So is there yes in there, that there should be more regulation, more supervision?

BLANKFEIN: Well, there should have been more than there was in September under the old regime, and right now it feels much different, it feels like a lot of regulation, and appropriately a lot.

JOFFE: Well, that was the morning panel. The next panel to come before the commission in the afternoon - they saw things a little differently.

PETER SOLOMAN: I don't think there's been great improvement.

BLUMBERG: This is Peter Soloman. He is not some activist or anti-Wall Street crusader. He was actually vice chairman at Lehman Brothers in the 1980s, and now he runs his own investment firm.

JOFFE: Peter Soloman says the major cause of the crisis: the four guys you just heard from this morning, the big banks. In fact, this is the theme of all of the panelists in the next session, all of whom were finance guys. They all said the big banks spent a lot of money trying to get Congress and regulators to do what they wanted. First you're going to hear Peter Solomon and then Michael Mayo, a financial services analyst with Calyon Securities.

SOLOMON: I mean, you can't have this much lobbying, this much money spent without - I assume these folks wouldn't do all that unless they thought they were getting value received.

MICHAEL MAYO: The revenues the four banks represent this morning equal GDP of Argentina. If it's Argentina against Sheila Bair, who's going to win?

BLUMBERG: Sheila Bair, for those who don't know, she is the head regulator for commercial banks.

JOFFE: So it's sort of weird. Here you have a commission created by Congress to figure out what went wrong at the big banks, and one answer that seems to emerge: Congress can't resist the money the big banks throw at them.

BLUMBERG: I'm Alex Blumberg.

JOFFE: And I am Chana Joffe-Walt, NPR News.

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