Momentum Building for a Pecora Commission-Type Investigation

May 3, 2009 (LPAC)—Momentum indeed appears to be growing for an investigation into the financial practices behind the worsening economic crisis. The House version of the Senate's Fraud Enforcement of Recovery Act is scheduled to come to the House floor this coming week, and House leaders say there will be a vote on Pecora Commission language authorizing an investigation, according to Bloomberg news reports today.

This would then have to be reconciled with a Senate bill. The Senate bill takes the form of an amendment to a bill authorizing broader powers to investigate financial fraud (Fraud Enforcement Recovery Act-FERA), and is sponsored by Senators Byron Dorgan (D-N.D.) and John McCain (R-Ariz.); it authorizes a Senate select committee, with full subpoena power, to conduct such an investigation. The Senate bill also includes an amendment, sponsored by Senators Johnny Isakson (R-Ga.) and Kent Conrad (D-N.D.), that would create an external commission.

Rep. John Dingell (D-Mich.) introduced resolution similar to the Dorgan-McCain resolution, H. Res. 345, on April 21. On April 24, he sent a letter to House Speaker Nancy Pelosi (D-Calif.) asking her to push for its consideration by the House Rules Committee. "Just as our predecessors did in the wake of the 1929 stock market crash, we, too, must comprehensively investigate the unsavory practices in the financial services industry that have led our nation to an economic precipice of gargantuan proportions and take measures to prevent their recurrence." Dingell noted that his resolution would establish a House select committee whose members would be drawn from the standing committees of jurisdiction. Such a commission, Dingell wrote, would "create a factual record for the purpose of enacting legislation that re-imposes a strict regulatory framework upon the financial services industry."