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Guest column: Congress should investigate financial meltdown |
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| Opinion | |||
| Written by Charles Schollenberger, Guest Columnist | |||
| Wednesday, 06 May 2009 00:00 | |||
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Let me add my name to the growing list of those calling for a full-scale congressional investigation into the circumstances that led to the meltdown of our financial institutions last year. It has been estimated that over $2.5 trillion in retirement funding went up in smoke in the collapse, according to Financial Advisor magazine. To a public becoming increasingly familiar with seeing figures in billions of dollars, that's $2,500 billion in lost dreams for a comfortable retirement, for grandchildren's educations, or other good uses. And these figures don't begin to reflect the cost on the economy in lost jobs, wages and taxes. Of that $2.5 trillion, an estimated $600 billion in 401(k) plans alone vanished in the stock market crash due to unregulated financial institutions that engaged in risky if not criminal behavior. The public deserves to know what happened and deserves tough legislation to keep it from happening again. A congressional investigation is needed to sort through some serious charges floating around. Foremost among them is that the FBI warned the Bush administration of an epidemic of mortgage fraud in September 2004, and that the warnings went unheeded. William K. Black, a former bank regulator who is now associate professor of economics and law at the University of Missouri-Kansas City, says the horrific market crash of last year could have been avoided if the FBI warnings had been heeded. And the public, who is footing the bill of the stock market collapse through lost billions in savings, bank bail-outs, or stimulus plans, deserves to know how it happened. The president has challenged Congress to implement new financial regulations by the end of this year. But these can only be determined after a careful study of what happened last year. Quick fixes should not be implemented at the expense of the truth. "We need real hearings, conducted by experienced and fiercely independent counsel asking the tough questions, or an official commission with subpoena power that can generate evidence leading, if warranted, to trials and convictions," says Bill Moyers, of Bill Moyers Journal. So a Senate investigation is one of the most important priorities facing our country right now. And it is not without precedent. It happened during the Great Depression in 1932 with the creation of the Pecora commission. The Pecora hearings provoked public outrage about banking and stock market abuses and resulted in landmark federal legislation that created new banking and securities laws that protected our economy for more than 50 years. These laws functioned well until the zealous "de-regulators" of the 1980s either repealed them (the Glass-Steagall Act) or failed to enforce them. And last but not least, an important part of congressional hearings will be helping to explain the need for stronger government regulations for the financial industry. We need to remind citizens, as Professor Black says, that "Regulations, when enforced, mean that cheaters don't prosper." Charles Schollenberger, Prairie Village, is a journalist, communications executive and teacher.
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