So it turns out we haven’t gotten financial regulatory reform, and we haven’t gotten executive compensation. We got stiffed on cram-down and on credit card reform. Business is more or less back to usual on Wall Street, with bonuses flowing freely, and even more disturbingly, the repacking of mortgages returning as a dog to its vomit.
Almost as a consolation price, what progressives have gotten is a Financial Crisis Inquiry Commission, headed by Phil Angelides. And a huge amount of hope has been generated that maybe this Commission will turn out to be a new Pecora Commission, exposing the greed, the fraud, the sheer incompetence of the financial sector, and discrediting the so-called “FIRE” (Finance, Insurance, and Real Estate) economic model. The original Pecora Commission gave the New Deal’s financial regulations an enormous amount of legitimacy in the eyes of the public, but in a larger sense they also wiped away the idea that business knows best – at least until the tide turned towards deregulation in the 1970s.
But before we get our hopes up, we need to take a second look at history.