Weapons of Mass Destruction and  ALL the Terrorists Attacks thus far could not come near matching the Devastation to the US  of what Warren Buffett called the “financial weapons of mass destruction”, the synthetic "derivatives" and credit-default swaps, that made Billions for Bankers and  left Millions of US Households in ruin. a repeat of the stock market crash of 1929 that led to the Great Depression. 

This most recent Debacle could have been Avoided, if the Legislation spawned by the "bulldog" investigations of Sicilian-born immigrant,  Ferdinand Pecora, a NY Prosecutor appointed by FDR in 1934, had been properly enforced, and not watered down.

Geo Bush II was proud of being the Great DeRegulator (mimicked by John McCain) and appointed  PRO Banker Regulatory Heads, like Christopher Cox, head of the SEC. It does little good to have a Regulatory Agency in place, if its chief acts as if  "Gov't should keep out of the way of Business", rather than the "Gov't should prevent Business Excesses and Greed". 

Yet when you have Corporate Oligarchies creating "Tea Bagger Campaigns " to Roil vs "Socialism", there is little chance of the "Anger of the Public" be properly directed against the Bankers, as was in the 30s, but instead be directed against the "Reformers" of the Bankers. 

See Below:  "Ferdinand Pecora, Original Reformer, A Model" and "The Other Plot to Wreck America" 

Washington Post;By Brady Dennis; Wednesday, September 16, 2009 

The last time Washington enacted sweeping financial reform, more than 75 years ago, the catalyst was a cigar-smoking, Sicilian-born immigrant named Ferdinand Pecora. 
 

Ferdinand Pecora's basis for reform helped maintain relative stability in the banking industry until the recent crisis. (1938 Wide World Photo)

A former New York prosecutor, Pecora was the last in a series of investigators hired to examine the causes that led to the stock market crash of 1929 for the Senate Committee on Banking and Currency. In early 1933, the newly-elected Democratic president, Franklin D. Roosevelt, gave the bulldog lawyer his blessing to dig deep into the excesses that had plunged the nation into the Great Depression. 
The result was a relentless investigation, 12,000 pages of transcripts that laid bare abuses on Wall Street and failures of Washington to adequately regulate the nation's financial system. Pecora's efforts provided a basis for reforms that would alter Wall Street and maintain relative stability in the banking industry until the recent crisis. These included legislation that for the first time regulated the sale of securities and helped establish the Federal Deposit Insurance Corp. and the Securities and Exchange Commission. 
For all the differences between then and now, there also are whispers of familiarity: Abuses on Wall Street. The blind eye of Washington. An economy in crisis. A new and eager administration calling for reform, and efforts by those with vested interests to shape those reforms to their will. 
On Monday, President Obama tried to wake the national debate over financial reform from its August slumber, urging Wall Street to embrace the changes rather than seek to impede them. But Wall Street has rarely embraced broad change without some prodding. 
Pecora and his small team of dogged investigators recognized as much in the 1930s. They issued subpoenas and summoned the titans of finance to Washington, where Pecora savaged them during a series of probing and withering cross-examinations. Charles E. Mitchell of National City Bank, the precursor to Citibank, was forced to resign after Pecora revealed his many transgressions. Likewise, financier J.P. Morgan, namesake of J.P. Morgan Chase and Morgan Stanley, left with a battered reputation. 
Day after day, Pecora turned the proceedings into riveting political theater. He made villains of some of Wall Street's most revered bankers, earning them the nickname "banksters," generating a steady stream of headlines and captivating the nation. ...
At the same time, Pecora's relentless grillings drew back the veil on the shrouded world of Wall Street and revealed excessive salaries, failures to pay income taxes and a litany of other abuses. 
"His investigation drove these bills and made them stronger than they would otherwise have been," Don Ritchie, an associate historian for the Senate, said. "I don't know any other investigation that produced as much" legislation. 
Harnessing the Outrage
Above all, Pecora understood the power of public outrage. 

"Pecora's success was his ability to crystallize the anger that a lot of Americans were feeling toward Wall Street," said Michael Perino, a law professor at St. John's University and author of an upcoming book about the hearings. "He was able to create a clamor for reform." 

But Pecora also realized that such clamor was fleeting. In his 1939 book, "Wall Street Under Oath," Pecora wrote, "The public is sometimes forgetful." As memories of the stock market crash faded, he warned, Americans "may lend at least one ear to the persuasive voices of The Street subtly pleading for a return to the 'good old times.' " 
Reflecting on his investigation, Pecora recalled how "the captains of Wall Street, still within the shadow of panic and depression," had seemed at first eager to submit to oversight. But it didn't last. 
"The more business recovered, however, and the stronger it felt, the more openly and bitterly did Wall Street oppose any sound program of reform," he wrote. 
That's what current advocates of regulatory change fear. 
"We've passed the moment when there's this palpable anger directed at the financial community," Perino said of the current crisis. "When you leave the immediate vicinity of the crisis, as you get farther and farther away in time, the urgency fades." Key legislators like Rep. Barney Frank (D-Mass.), who leads the House Financial Services Committee, and Sen. Christopher J. Dodd (D-Conn.), who chairs the Senate Banking Committee, have said they plan to push aggressive reforms this fall. Obama insists that issue remains near the top of the agenda. 
But both policymakers and lobbyists know that it's usually easier to block reforms than to reach consensus, that enough delay can kill any bold proposal in Washington. 
Simon Johnson, professor of entrepreneurship at MIT's Sloan School of Management, says, "We have not yet met our Ferdinand Pecora," a figure who can create the momentum required for strong new regulations. But, Johnson added, "Pecoras can emerge." 

 One possibility is that such a character could come out of the 10-member Financial Crisis Inquiry Commission, which was set up by Congress in July to investigate various aspects of the current crisis. The panel's chairman, Phil Angelides, a former California state treasurer and longtime Democratic donor, explicitly said in a recent Bloomberg interview that he planned to use Pecora as a model and pursue "non-political hard look" at the causes of the crisis. 
Making the Law Work

Yet the landscape confronting today's advocates of reform is far different from that of the 1930s. 
"In the earlier period, there essentially was very limited federal regulation -- nothing in securities, nothing in commodities, nothing in insurance," said Joel Seligman, president of the University of Rochester and an expert in securities regulation. "To the extent you had economic regulation, a fair amount was at the state level." 
These days, the country has an elaborate regulatory system, albeit one whose failings became obvious during the current crisis. Obama isn't advocating an entirely new system. He's mostly trying to repair the current one. His boldest proposals include a new agency that would oversee consumer financial products such as mortgages and credit cards and expanding the power of the Federal Reserve to monitor systemic risks throughout the economy. 
Whatever regulatory changes ultimately emerge from Congress, they alone may not be enough. In his book, Pecora -- who went on to become an SEC commissioner under its inaugural chairman, Joseph P. Kennedy Sr., and later a New York Supreme Court judge -- warned that laws themselves "are no panacea; nor are they self-executing." 
On the day that Franklin Roosevelt signed the Securities Exchange Act into law in 1934, Pecora was in attendance. At one point, the president turned to Pecora and asked, "Ferd, now that I have signed this bill and it has become law, what kind of law will it be?"... 
Pecora said, " (It) depends upon the men who administer it." 
http://www.washingtonpost.com/wp-dyn/content/
article/2009/09/15/AR2009091501936_2.html

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much. 

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses. 

The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

It’s against this backdrop that this week’s long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation. 

He wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened. 

Angelides gets it. But he has a tough act to follow: Ferdinand Pecora, the legendary prosecutor who served as chief counsel to the Senate committee that investigated the 1929 crash as F.D.R. took office. Pecora was a master of detail and drama. He riveted America even without the aid of television. His investigation led to indictments, jail sentences and, ultimately, key New Deal reforms — the creation of the Securities and Exchange Commission and the Glass-Steagall Act, designed to prevent the formation of banks too big to fail.

As it happened, a major Pecora target was the chief executive of National City Bank, the institution that would grow up to be Citigroup. Among other transgressions, National City had repackaged bad Latin American debt as new securities that it then sold to easily suckered investors during the frenzied 1920s boom. Once disaster struck, the bank’s executives helped themselves to millions of dollars in interest-free loans. Yet their own employees had to keep ponying up salary deductions for decimated National City stock purchased at a heady precrash price.

Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)’s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault. Somewhere Pecora is turning in his grave

Rubin has never apologized, let alone been held accountable. But he’s hardly alone. Even after all the country has gone through, the titans who fueled the bubble are heedless. In last Sunday’s Times, Sandy Weill, the former chief executive who built Citigroup (and recruited Rubin to its ranks), gave a remarkable interview to Katrina Brooker blaming his own hand-picked successor, Charles Prince, for his bank’s implosion. 

...At Citi, Weill built little more than a bloated gambling casino. As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth. Citi, that “innovative” banking supermarket, destroyed far more wealth (of others,  than it created for itself)...

Even now — despite its near-death experience, despite the departures of Weill, Prince and Rubin — Citi remains as imperious as it was before 9/15. Its current chairman, Richard Parsons, was one of three executives (along with Lloyd Blankfein of Goldman Sachs and John Mack of Morgan Stanley) who failed to show up at the mid-December White House meeting where President Obama implored bankers to increase lending. (The trio blamed fog for forcing them to participate by speakerphone, but the weather hadn’t grounded their peers or Amtrak.) 

Last week, ABC World News was also stiffed by Citi, which refused to answer questions about its latest round of outrageous credit card rate increases and instead e-mailed a statement blaming its customers for “not paying back their loans.” This from a bank that still owes taxpayers $25 billion of its $45 billion handout! 

If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, it’s because it fears no retribution. And it got more good news last week. Now that Chris Dodd is vacating the Senate, his chairmanship of the Banking Committee may fall next year to Tim Johnson of South Dakota, home to Citi’s credit card operation. Johnson was the only Senate Democrat to vote against Congress’s recent bill policing credit card abuses. 

Though bad history shows every sign of repeating itself on Wall Street, it will take a near-miracle for Angelides to repeat Pecora’s triumph. Our zoo of financial skullduggery is far more complex, with many more moving pieces, than that of the 1920s. The new inquiry does have subpoena power, but its entire budget, a mere $8 million, doesn’t even match the lobbying expenditures for just three banks (Citi, Morgan Stanley, Bank of America) in the first nine months of 2009. The firms under scrutiny can pay for as many lawyers as they need to stall between now and Dec. 15, deadline day for the commission’s report. 

More daunting still is the inquiry’s duty to reach into high places in the public sector as well as the private. The mystery of exactly what happened as TARP fell into place in the fateful fall of 2008 thickens by the day — especially the behind-closed-door machinations surrounding the government rescue of A.I.G. and its counterparties. Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence?   Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all. 

http://www.nytimes.com/2010/01/10/opinion/10rich.html?em

The ANNOTICO Reports Can be Viewed (With Archives) on:
[Formerly Italy at St Louis]