Comments on: Pecora in Perspective: Everything Old is New Again — the Pecora Commission Redux

By: Cynthia Kouril

Cynthia Kouril — Thu, 11 Jun 2009 11:23:54 +0000

Thank you Sara, That’s a great insight

By: Cynthia Kouril

Cynthia Kouril — Thu, 11 Jun 2009 11:23:05 +0000

This is the first in a weekly series that is planned for this time each Wed.

By: MarkH

MarkH — Thu, 11 Jun 2009 07:22:11 +0000

If it can be gamed it’s just a fancier Three Card Monte or Carnival ‘game’.

By: Sara

Sara — Thu, 11 Jun 2009 04:30:54 +0000

Cynthia — dig in a little to both the members of the Pecora Commission and some of the staff who served it. One important aspect of this commission is the young lawyers from places like Harvard, Michigan, Wisconsin who came to DC as “reformers” and served the commission well, and then had long careers in the professional Civil Service in the Regulatory agencies that were created, and were still around in the 50’s and 60’s, overseeing the regulatory regimes. The network for many of these was called “Frankfurter’s Hot Dogs” — Frankfurter at Harvard had been the great exponent of a well crafted regulatory regime, and he had seeded in the 1920’s many of his best students in the faculty of law schools of Michigan, Wisconsin, and other non-elite law schools, and they produced the bright students who could carry these reforms. I am not certain we have a Frankfurter these days — but perhaps we do, and just don’t know it. To understand it, you have to look at some of Frankfurter’s writings about regulation that date before the crash, when he was Dean at Harvard Law.

One reason the recommendations of the Pecora Commission took hold was because that generation of young lawyers, economists, etc., became the institutional memory in the Regulatory Agencies, and were quitely respected for that over the years. No one wanted another crash. Many reached retirement age in the Nixon Years, and were simply not replaced. The “hot dogs” tended toward becoming legal counsel for a regulatory body, and then rather than selling out to K-Street or Industry, just stayed put for 35 years or so enforcing the laws. There are several biographies of Frankfurter, any one of which will give you the flavor of the network he created and the profound influence it had over perhaps 30-35 years.

By: BooRadley

BooRadley — Thu, 11 Jun 2009 02:31:15 +0000

Great post Cynthia, thank you.

I keep wishing the big remaining dailies left in the rust belt would pick up this kind of great content.

By: SunnyNobility

SunnyNobility — Thu, 11 Jun 2009 02:30:52 +0000

Thanks Cynthia, good post.

By: Cynthia Kouril

Cynthia Kouril — Thu, 11 Jun 2009 02:02:57 +0000

One of the problems with both mortgage backed securities –artificially amped up with credit deafult swaps–and with derivatives is that the “valuation” of these so called securities is not transparent.

When a security becomes so complex that the MOTU cannot explain how they work, they cease to be suitable for the general market, or perhaps any market?

The rating agencies also have a lot to answer for.

By: SouthernDragon

SouthernDragon — Thu, 11 Jun 2009 01:32:39 +0000

A little more info on the Pecora hearings.

Where is our Ferdinand Pecora? NYT 5 Jan 09

Pecora Part II? Moyers 24 Apr 09

Wouldn’t it be loverly? tra la la

By: TarheelDem

TarheelDem — Thu, 11 Jun 2009 01:26:36 +0000

Lack of transparency inevitably destroys a market.

If it can be gamed, it’s not a market, it’s something else.

By: nahant

nahant — Thu, 11 Jun 2009 01:11:50 +0000

Who really cares?? you know what the intended word was… just saying.. last I checked we all put our pants on the same way /s
Edit I love you..