I’m Elizabeth Wynne Johnson of Capitol News Connection.
This Week in Congress...featured three full days devoted to the ongoing economic autopsy that is the Financial Crisis Inquiry Commission. The FCIC is a bipartisan panel appointed by Congress to "examine" the causes of the financial collapse.
Long-term, perhaps it will yield useful guidance for the future. Near-term, it’s a stage, a spotlight and a megaphone.
In a packed hearing room Wednesday, a wizened owl in the form of former Fed chairman Alan Greenspan confronted a panel of commissioners with freshly sharpened questions and one major theme: the litany of pre-crisis reports and red flags that belie industry claims of being caught ‘unawares.’
ANGELIDES: Very simply Mr. Chairman, why in the face of all that, did you not act to contain abusive, deceptive subprime lending? Why did you allow it to become such an infection in the marketplace? [pause]
That long pause after the question from commission chairman Phil Angelides, would be followed by an answer - though not one that would move Angelides off his fundamental premise:
ANGELIDES: You could have, you should have, and you didn’t.
For his part, Greenspan held to a fundamental point of his own:
GREENSPAN: All innovation by its very nature is "unforecast-able" with respect to how it will come out.
OK – maybe not quite the answer this panel is looking for...
GREENSPAN: Fortunately what causes progress and productivity is that more innovations are positive than otherwise. You cannot tell in advance which is which. The only way to solve that problem is to have enough capital that will absorb x-percent of innovations failing.
Greenspan also favors more regulation – but with no promise that more government oversight means "no more crises."
The commission heard from former subprime lenders, and top former Citigroup executives who ran its increasingly risky mortgage-lending activities. On Thursday, Angelides asked former Citigroup board member Robert Rubin:
ANGELIDES: Do you bear central responsibility for the near-collapse, but for the U.S. government, of Citigroup?
RUBIN: I think, Mr. Chairman- let me respond to that in a number of parts, if I may...
One part did include acknowledging responsibility, insofar as the industry itself bears collective responsibility. Former Citigroup CEO Chuck Prince said running a securities business is like running a baseball team made up entirely of free agents.
PRINCE: If you’re not engaged in business, people leave. And so it’s impossible in my view in the leveraged lending business for you to say to your bankers, we’re just not going to participate in the business until things get a little more rational. You can’t do that.
The takeaway: that it is the very nature of the business to pursue an inexorable path that leads, inevitably, to a state of irrationality? Here’s how the process is going down so far with commission vice-chair Bill Thomas – one of the Republican appointees...
THOMAS: I will tell you it is impossible for me to go back home, which I’m going to do shortly, and tell people that we had a panel of four people who, over three to five years, earned – based upon the creativity that they supervised, which apparently they didn’t understand and couldn’t measure – almost $150M on the way up. But that same team on the way down didn’t have a nickel clawed back.
Congress returns from recess next week – with financial regulatory reform high on the agenda.
That was This Week in Congress. I’m Elizabeth Wynne Johnson, Capitol News Connection.
Foraging for fungi and other wild edibles has grown in popularity in the U.S. and abroad in recent years, fueled by guidebooks, Internet buzz and hype from chefs. As a result, some known mushroom hunting grounds are taking a beating.