Pressure Grows for Bipartisan Probe of Regulatory Lapses Behind Financial Crisis
In response to calls for action from outraged constituents, there is growing bipartisan support among rank-and-file members of Congress for a full-scale investigation of the regulatory lapses that allowed an economic debacle perhaps second only to the Great Depression of the 1930s to sweep through the country.
Many are now supporting a move to create a special independent commission, comparable to the one appointed by Congress to investigate the Sept. 11, 2001 terrorist attacks, although this idea hasn’t been endorsed either by Democratic leaders or the White House, reports the Wall Street Journal. While regulators and other congressional entities already are looking into the situation, there is concern that, without such a commission, no one will adequately address big-picture issues, in part because of a lack of resources.
“Proponents say a thorough look at past errors is needed as Congress prepares for a sweeping overhaul of the financial-regulatory system,” the newspaper writes. “Pressure for a review also reflects the opinion that ongoing criminal probes aren’t sufficient.”
Although the Department of Justice is pursing criminal cases, some think the DOJ is focusing too much on individuals rather than companies out of concern that scrutinizing companies too closely could cause them to fail, the article explains.
Meanwhile, Congress is already gathering its forces for the biggest rewrite of financial regulations since it acted in the 1930s, under President Franklin D. Roosevelt, to create the Federal Deposit Insurance Corp. and other safety nets in response to the Great Depression, reports Bloomberg in a lengthy article detailing areas in which change is contemplated.
However, it may not be new regulatory structures but better enforcement of existing rules that is needed, former FDIC chairman William Seidman tells the news agency.
“I’m not convinced this has to be done,” he says. “The regulators just didn’t do their jobs. The laws are all on the books.”
Related coverage:
Washington Post: “Stumbling on Their Sense of Entitlement”
ABAJournal.com: “Why Madoff Warnings Were Ignored: Regulators Had Wrong Incentives”
