The next production of government sponsored financial crisis theater is set to open this week in Washington DC, and has assembled an all star ensemble cast of Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), JP Morgan Chase (NYSE:JPM), and Morgan Stanley (NYSE:MS). The play stars the Federal Crisis Inquiry Commission in the lead role as protagonist with the four previously mentioned banks in supporting roles cast as the villain.
The creation of the Federal Crisis Inquiry Commission follows the reactionary tactics long utilized by the US government. Well after the crisis has passed, form a panel with limited power and authority, pretend to investigate, and issue a report that is so dense and filled with double-speak that it benefits no one. It will undoubtedly give panel commissioners, politicians from both parties, and the current administration the opportunity for grandstanding, soap box speeches, and publicly grilling unpopular banking CEOs.
It’s likely that between prepared statements by bank CEOs that one or two comments will slip out, or be taken out of context that will paint the bankers as greedy evil-doers. But don’t be misled, the purpose of this commission and next weeks’ inquiry isn’t to find answers or even a scapegoat. The purpose is to give politicians the appearance of truth seeking action and justice for the common man.
The Federal Crisis Inquiry Commission is supposedly modeled after the Pecora Commission that led the investigation of the 1929 stock market crash and passage of major legislation of federal banking laws including the 1933 Glass-Steagall act. So can we expect the commission’s findings to lead to meaningful financial reform down the road? Highly unlikely. The commission was initiated in July 2009, took until September to hold their first meeting, and has taken 6 months to convene this meeting. Not exactly a fast track towards action.
So gird yourself for a few weeks of headlines, CNN coverage, and news reports, but don’t wait for it to lead to anything tangible, it’s all just a theater production. It’s entirely possible that by the time the report is issued (scheduled for December 15), the current financial crisis will be over and long passed from public memory. Don’t fret though, even if the Federal Crisis Inquiry Commission report does nothing in the future but gather dust on a shelf, you’ll always have this grand production to remember.
