We seem to have slipped into an alternate universe where regulators and politicians get tough on the banksters and their allies. The SEC sued Goldman Sachs. Blanche Lincoln and the Senate Agriculture Committee passed a strong derivatives bill with support from Chuck Grassley. Federal Reserve regional bank presidents are talking about breaking up the banks. The Republicans are backpedaling on blocking consideration of financial reform. Sherrod Brown and Ted Kaufman just introduced a great bill with size and leverage caps. And now, the somewhat quiet Financial Crisis Inquiry Commission just slapped a subpoena on Moody’s Corporation, the credit rating agency. Subpoena requests must have bipartisan support from the FCIC, and Republican Vice Chairman Bill Thomas joined in the issuance. From the emailed press release:
Today, Chairman Phil Angelides and Vice Chairman Bill Thomas announce that the Financial Crisis Inquiry Commission (FCIC) has issued a subpoena to Moody’s Corporation for failing to comply with a request for documents in a timely manner.
In seeking documents and testimony from public agencies and companies, the Commission has made it clear that it is committed to using its subpoena power if there is a lack of, or delay in, compliance. Failure to comply with a Commission request is viewed with the utmost seriousness, as the Commission will not be deterred from getting desired information.
In creating the Financial Crisis Inquiry Commission under the Fraud Enforcement and Recovery Act of 2009, Congress granted the Commission the power to “require, by subpoena or otherwise, the attendance and testimony of witnesses and the production of books, records, correspondence, memoranda, papers, and documents.”
Many have faulted the credit rating agencies for giving sterling ratings to toxic financial products like mortage-backed securities, leading to massive losses. The rating agencies are owned and funded by the banks creating the securities.
It’s entirely possible that some of this is kabuki, that in the end the banksters will win out. Indeed, the Gregg-Reed derivatives package could ultimately trump Lincoln’s stronger bill. But for the moment, you get the sense that there’s a turning of the tide in Washington, and everyone’s riding the populist wave.