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Senator Shelby Regrets
Obama's Refusal To Hold
Pecora-Style Investigation

May 11, 2011 (EIRNS)—In a statement delivered to the May 10 hearing of the Senate Banking, Housing and Urban Affairs Committee, which heard the mandated report-back from Financial Crisis Inquiry Commission (FCIC) Chairman Phil Angelides, ranking Republican member Sen. Richard C. Shelby (ALA) again raised the question of the need for a Pecora-style investigation of the financial crisis.

Sen. Shelby had fought for establishing such an investigation, under the auspices of the Banking Committee itself, back in 2009. As he explained again May 10:

"I noted that this committee responded to the Great Depression by launching the so-called Pecora Investigation. That investigation went on for more than two years and laid the foundation for groundbreaking legislation including the Banking Act of 1933, which created the FDIC, the Securities Act of 1933, and the Securities Exchange Act of 1934, which created the SEC."

Although Sen. Shelby did not mention it by name, the Banking Act of 1933 also established the Glass-Steagall standard of banking, separating commercial and investment banking. Sen. Shelby himself had opposed the overturning of Glass-Steagall in 1999.

Sen. Shelby also noted that, after refusing to carry out such an investigation through Committee, the Obama Administration ignored the findings which the FCIC did make—preferring to rush through the Dodd-Frank bill. That bill did not, of course, address the major issues raised by the FCIC report, specifically the eliminating of Glass-Steagall and the total deregulation of derivatives in 2000. In fact, as of this week, between a decision by Treasury Secretary Geithner and the Republican-dominated House, all new regulations on derivatives are put off for at least 18 months.

Sen. Shelby's intervention begs the question of the Glass-Steagall reinstatement, indicating the potential for bipartisan support in the Senate—provided a mass popular mobilization succeeds in forcing the vital measure through in the House.