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Where is the Great Recession Commission?

Jim Hall
Hall & Associates LLC


As a concerned citizen and investor, I’ve followed our struggling stock market with keen interest since its plummet last fall. One thing that strikes me is the similarity between this “crash” and that of a jumbo jet. As a former chairman of the National Transportation Safety Board, the agency charged with investigating our nation’s air crashes, I feel there is much to learn from this parallel.

    In the wake of an airline crash, pandemonium ensues. First responders — often an ad hoc team of federal, state and local emergency personnel — arrive on the scene to assess the damage and ensure the survivors are receiving the care needed, by any means possible. Next come the media, eager to provide in-depth coverage of the tragedy and speculate as to its cause. In higher-profile crashes, elected officials may step in, offering legislative solutions to what may be newly identified risks.

    But long after the nation has turned its attention elsewhere, an exhaustive investigation of the crash will continue, often for months or years. Its purpose: to understand every detail about the incident and make recommendations to the relevant entities to ensure that such a tragedy never recurs. This is the duty of the NTSB, an independent agency created by Congress in 1967 based on the belief that to eliminate systemic risks and tragedies in the future we must understand those of today.

    In contrast to the similarities between aviation and financial crashes, there is one stark difference: Nowhere is there being undertaken an independent, holistic investigation into the events, circumstances and actions that precipitated the current crisis. The time is ripe for such an investigation. While taxpayers are beginning to be repaid as banks refund their bailout money, those investors who placed their confidence and capital in these financial institutions prior to the crash are left without answers. To truly instill faith in the system and ensure that another meltdown is avoided, a comprehensive inquiry is required.

    We’ve heard about the ofttouted “stress tests” of our banks; while useful in moving forward, they do nothing to determine how we got here in the first place. And while some small regional banks have been investigated, only a comprehensive look at the system — especially its biggest players — will tell regulators and corporations how to prevent another catastrophe. What’s more, the inquiries currently under way are being conducted by the SEC or the Treasury — agencies that have admitted to playing a role in the crisis. Only an independent commission will be able to make credible, unbiased assertions about its causes.

    In the crash’s immediate wake, many felt that to look backward would dent the confidence needed for recovery. Now, more than a year has ensued since Lehman Brothers’ bankruptcy; while the crisis is far from over, the apocalyptic predictions are gone. Furthermore, practices that most agree played a role — high-risk lending and a flawed executive compensation system — are being reinstituted after a brief, face-saving holiday. Now is the time to investigate what brought us to the brink.

    Skeptics who doubt whether such a commission would have any effect need only examine the numerous precedents in which retrospective investigation changed our country for the better. After the 1907 Bankers’ Panic, when J.P. Morgan was forced to personally back the banks of New York to prevent catastrophe, Congress established the National Monetary Commission, whose reports regarding the panic provided the basis for the creation of the Federal Reserve.

    Similarly, the Great Crash of 1929 precipitated the formation of the Pecora Commission, whose recommendations led to the Glass-Steagall Act and important reforms of the banking system. Most recently, the 9/11 Commission Report, published after a years-long, meticulous investigation into the 2001 attacks, changed our homeland security infrastructure, intelligence operations and national transportation systems in meaningful ways that have unquestionably improved the well-being of our citizens.

    While poring over the accounts of the disasters our NTSB investigations detailed, I was always motivated by the fact that our work would allow us to glean lessons from tragedy. By the same token, only a comprehensive, independent investigation will ensure that this past year’s financial crisis leaves more than joblessness and debt in its wake, and that our nation’s investors will have renewed faith in the system. To our fellow Americans who lost their jobs, careers and savings, this Congress and this administration owe nothing less.


    Jim Hall, of Signal Mountain, Tenn., is a former chairman of the National Transportation Safety Board. He is the managing partner of Hall & Associates LLC, a safety consulting firm in Washington, D.C. He can be reached at jhall@hallassoc.net.

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