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In May 2009, Congress passed the Fraud Enforcement and Recovery Act which created the Financial Crisis Inquiry Commission, an independent, bipartisan panel tasked to examine the causes of the current financial and economic crisis in the United States.

Franklin Roosevelt never created an independent commission to investigate Wall Street, but the Pecora hearings, the eponymous investigation of Wall Street wrongdoing run by a former New York prosecutor, captivated the country. For sixteen months in the worst depths of the Great Depression, Ferdinand Pecora paraded a series of elite financiers before the Senate Banking and Currency Committee. In one hearing after another, he chronicled how the leaders of Wall Street had manipulated stocks, dodged taxes, fleeced their shareholders, and collected enormous bonuses for peddling shoddy securities to unsuspecting American investors.

Sensational headlines galvanized public opinion for reform and created the climate in which Congress was able to re-shape much of the modem structure of federal financial regulation. In the first hundred days of Roosevelt's administration, Congress passed the Banking Act of 1933. Earlier, Congress had passed the Securities Act of 1933. A year later came the Securities Exchange Act of 1934. Now, more than a year after the FCIC released its final report, it is clear that the Commission did not live up to the legacy of its Depression-era predecessor. It was not until six months after the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted that the FCIC released its report on the causes of the financial crisis.

This article compares the politics that underlay the FCIC investigation with those not only of the Pecora investigation but with those of what is generally perceived as a more successful independent commission—the National Commission on Terrorist Attacks upon the United States (the 9/11 Commission). When Congress created the FCIC it rejected proposals to conduct a congressional investigation more in line with the Pecora investigation and instead chose to model the FCIC explicitly on the 9/11 Commission.

This paper highlights two reasons why the FCIC was not the Pecora investigation redux and why it failed to achieve the same consensus as the 9/11 Commission. The first explanation involves how the goals for these different investigations were defined. As explained in more detail in Section II, the Pecora investigation appears to have represented an innovative and novel application of congressional investigatory power. While the Pecora probe was ostensibly designed to investigate conditions in the securities markets in preparation for potential legislation, it differed from prior congressional efforts because its motivation was external to the legislature. The second reason why the FCIC hearings never looked like the Pecora hearings was because the former's design and structure bore absolutely no resemblance to the latter. Rather than being an investigation by a standing congressional committee subject to the near dictatorial control of the committee's chair, the FCIC was an independent, bipartisan commission that needed consensus to operate effectively. As explained in Section III, the FCIC was subject to the same limitations and political pressures that beset the 9/11 Commission's investigation. Both commissions faced numerous obstacles to conducting vigorous investigations: the partisan selection of commissioners combined with broad commission mandates, woefully small budgets, short time frames for conducting their investigations, and weak subpoena powers. The 9/11 Commission's chairman, former New Jersey Governor Thomas Kean, went so far as to argue that his commission was designed to fail.



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