WASHINGTON Former U.S. Treasury Secretary Henry Paulson might be among witnesses called to testify by Congress' Financial Crisis Inquiry Commission, its chairman told Reuters Television in an interview on Thursday.
Speaking immediately after the bipartisan fact-finding panel's first meeting, Chairman Phil Angelides said it must examine the major financial institutions that collapsed or would have collapsed if not for government bailouts.
"Most people know there's a short list there. There's Lehman, Bear Stearns, Merrill Lynch, Fannie Mae, Freddie Mac, AIG. So we'll look at those major institutions," said Angelides, a Democrat and former California state treasurer.
"But we will be calling in many key players -- the credit rating agencies, the regulators. We want to do a full inquiry into what brought the financial system to its knees," he said.
Asked if Paulson might be called in as a witness, Angelides said: "We might well. Our job is to get the information."
The 10-member commission, appointed by Congress, is charged with getting at the roots of the debacle that late last year brought world banks and markets to the brink of collapse.
"Our plan is to be holding public hearings before the end of this year," he said. "We will be calling for key figures from both government, as well as the private sector ... We have been given the power of subpoena."
PECORA PANEL RECALLED
The panel's scope and powers recall the Senate Banking Committee's efforts in the opening years of the Great Depression.
The panel hired Ferdinand Pecora, a relentless New York assistant district attorney, who presided over widely publicized hearings on the causes of the crash of 1929. The hearings fueled passage of landmark market regulations.
"If we do this right, our work can serve as an antidote -- much as the Pecora hearings did in the 1930s -- to the kinds of financial market practices that none of us would want to see be repeated ever again," Angelides said.
Angelides' commission is convening as the Obama administration needs a spark to reignite its drive for tighter oversight of banks and capital markets.
Financial regulation reform just six months ago appeared ready to sweep all obstacles before it. Now bogged down in Congress, stiff resistance from banking lobbyists has been a factor as has slow-walking by Republican opponents.
Former Senator Bob Graham, a commission member, said some critics contend the panel is designed to delay reform, while others say the window for reform has already been missed.
"This commission has a critical duty not to contribute to this cynicism ... procrastination and delay," he said, adding that it should coordinate its work with that of Congress.
The commission is required to report its findings to Congress and President Barack Obama by December 15, 2010.
The House of Representatives looks set to move on several Obama administration draft bills by the end of the year, but there is no clear path forward in the Senate.
"The administration and Congress should not await the commission's report," said commission member Brooksley Born, former chairman of the Commodity Futures Trading Commission.
"Powerful financial interests have begun to mobilize forces to prevent meaningful reform and get back to business as usual," she said, warning that momentum for change will fade if Congress waits too long and as the economy stabilizes.
CAUSES SEEN AS UNDERSTOOD
Some critics have said the causes of the crisis are already understood, ranging from deceptive mortgage lending and reckless debt securitization, to irresponsible banker bonuses and unpoliced over-the-counter derivatives markets.
Dredging through all that again will only be a waste of time and a distraction from more urgent tasks, they said.
Angelides disagrees. "There are some people who aren't interested in full discovery, but there is an important role for an official government inquiry and I would say that it's presumptuous to say we know what happened," he said.
The commission will soon send document retention letters to firms and individuals it may want to talk to, he said. The letters will assure that valuable records are preserved.
Before year-end, Angelides said, "we expect this whole inquiry to be fully under way and to be holding public hearings ... not just here in Washington but across the country."
Besides Angelides, Graham and Born, other commission members include former Representative Bill Thomas and people from business, Wall Street and Washington think-tanks.