Financial Crisis Panel Poised To Grill Greenspan, Others

A bipartisan panel will try to pinpoint the causes of the financial meltdown.

April 6, 2010, 11:46 AM

April 6, 2010 -- The government's push to pinpoint the causes of the financial meltdown and prevent another crisis is expected to move forward this week when a bipartisan panel appointed by Congress will grill over a dozen high-profile officials, including former Federal Reserve Chairman Alan Greenspan.

The Financial Crisis Inquiry Commission, a 10-person panel tasked with submitting a report on the meltdown to President Obama later this year, will kick off three straight days of hearings tomorrow morning in Washington when Greenspan testifies about subprime lending problems.

On Thursday the commission will hear from Citigroup's former CEO Chuck Prince and former board chairman -- and former Treasury Secretary -- Robert Rubin as part of an examination of the bailed-out bank's mistakes. In the week's final hearing on Friday the panel will summon a handful of officials from government-backed mortgage giant Fannie Mae including CEO Daniel Mudd. A slew of other officials will also testify over the course of the three days.

But the headliner is former Fed boss Greenspan, once regarded as a financial wizard but now blamed by some for the crisis. In recent weeks Greenspan has embarked on a bid to restore his tarnished reputation, but sources do not expect him to deliver any mea culpas during his opening remarks on Wednesday.

A source familiar with Greenspan's testimony told ABC News that in his prepared remarks it is unlikely that he will go beyond what he has already said in taking responsibility for his role in the meltdown. Greenspan's team even asked the panel to make a report he wrote for the Brookings Institution part of the public record for the hearing. In that report, Greenspan said the Fed "did little to address the problem" of the ballooning size of major financial firms and failed to realize the severity of the housing bubble.

In an interview with ABC News' Jake Tapper on "This Week," Greenspan said the financial world failed to put in place adequate protections for risk-taking gone wrong.

"The major mistake was assuming what the nature of risk would be," he said. "And the reason it was missed is we have had no experience of the type of risks that arose following the default of Lehman Brothers in September 2008. That's the critical mistake. And I made it. Everybody that I know who works in this business made it."

"It means that basically we have to work our way back to understanding what went on," he stated. "And as I argue, what we need is far more required capital for financial institutions than we've had."

The financial commission has been tasked by Congress with examining the causes of the meltdown. The panel is set to deliver its report to the president and Congress by December 15, but that deadline, sources said, will be a tough one to meet.

A source familiar with the matter told ABC News that the panel feels good about the progress made thus far, but a great deal of work remains. One indication of the massive task that the commission faces is the fact that to date the panel has received over 500,000 documents comprising over two million pages. Not making matters any easier for the panel is its bipartisan structure: six of the ten members were appointed by Democrats, four by Republicans.

In addition, the panel's influence on Wall Street reforms could be minimal. Congress is already pushing ahead with bills to enact the biggest overhaul of Wall Street regulations since the Great Depression. The House of Representatives passed its reform bill late last year and the Senate is poised to take up its reform measure in the coming weeks – a final bill is expected to emerge within months.

Nevertheless, the panel is pressing on with its huge workload. At the group's first public hearing in January – featuring executives from four of Wall Street's biggest banks – the commission's chairman Phil Angelides stated, "People are angry and they have a right to be."

"If we ignore history," he noted, "we'll be doomed to bail it out again."

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