The Financial Crisis Inquiry Commission, a bipartisan panel appointed by Congress to examine the causes of the recent Wall Street meltdown, has been denounced by some critics as just another panel trotted out by Washington in the wake of a major upset.
"A dog and pony show," one financial industry source called the commission this week. But if nothing else at least the panel gives some of the key players in the meltdown a chance to apologize to the American people.
In January, Wall Street executives such as Morgan Stanley's John Mack apologized for their role in the meltdown. "There is no doubt that we as an industry made mistakes," Mack told the panel.
Former Federal Reserve chairman Alan Greenspan acknowledged errors, too. "Did we make mistakes? Of course we made mistakes," Greenspan said yesterday.
Today it was the turn of some of the former bosses at Citigroup, the massive bank that needed $45 billion of taxpayer help to stay afloat after suffering widespread losses on investments in subprime mortgages.
"I can only say I am deeply sorry that our management -- starting with me -- was not more prescient and that we did not foresee what lay before us," said former Citigroup CEO Charles Prince at the commission's hearing this morning on Capitol Hill.
Robert Rubin, who served as Treasury Secretary during the Clinton administration and later as a senior adviser to Citigroup just before the crisis, echoed Prince's mea culpa.
Referring to his time as a federal regulator, Rubin said, "We all bear responsibility for not recognizing this and I deeply regret that."
But at the same time Rubin and Prince today also defended their actions. They said they did not become aware of the bank's huge holdings of mortgage-backed securities until September 2007. And even then they believed that the bank was not at risk of severe losses because the securities held the highest triple-A ratings.
Bill Thomas, the commission's vice-chairman, was not persuaded by their arguments.
"What do you get paid for if it isn't having some intuition, understanding or knowledge?" Thomas asked. "Or do you just do what everybody else is doing because everybody else is doing it and if you don't do it you won't make money? Because I think it's all about money -- and it was big money on the way up, but never at any point on the way back down."
"This kind of an argument as to what happened in hindsight," he continued, "is like listening to someone blame the inferior quality of leather in a pair of shoes based on the feed that some person supplied to a farmer feeding the cattle that produced the leather."
The 10-person commission is due to submit a report on the causes of the financial crisis to President Obama and Congress by December 15. Today's hearing on Capitol Hill marked the second in a series of three hearings on the subprime meltdown that the panel is conducting this week. On Friday morning the panel will hear from former executives at bailed-out government-backed mortgage giant Fannie Mae and former bosses of a federal agency overseeing housing.
Also today, Rubin and Prince said Citigroup was not "too big to manage." Large banks, Rubin argued, have a role to play in the financial system.
"The overriding lesson of the financial crisis," Rubin said, "is that the financial system is subject to far more severe downsize risk than anyone had foreseen."