Pelosi orders wide Wall Street probe
House Speaker Nancy Pelosi has ordered a broad, swift investigation of Wall Street and will demand testimony from Bush administration officials and captains of finance, congressional officials said.House Democrats plan to aggressively look at the administration’s role in the meltdown over the weekend and to explore further regulation and government structures that would be taken up under the new president.
And the trouble could run even deeper than has been clear so far — and get more expensive for the U.S. government. The Associated Press reports that the fund established to insure bank deposits is dwindling, with the taxpayer as the lender of last resort. "The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said," The AP reported.The hearings ordered by Pelosi will take place over the next few weeks, the officials said. Treasury Secretary Henry Paulson, who regularly appears on Capitol Hill, will be called to testify as part of the investigation.As the main event, Rep. Henry Waxman (D-Calif.), chairman of the House oversight committee, wrote to Richard Fuld, chief executive of the imploded Lehman Brothers, to ask him to appear on Capitol Hill on Sept. 25.“The hearing will examine the regulatory mistakes and financial excesses that led to yesterday's bankruptcy filing by Lehman Brothers,” Waxman wrote. “The committee will also explore the impacts of the Lehman bankruptcy on financial markets and the United States economy.”
Separately, Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, plans a forward-looking hearing with economists on Wednesday to “begin a conversation about where we go with the capital markets,” a House aide said.Frank plans “oversight of what happened this weekend with the Treasury and Federal Reserve,” and will look at “how bad the capital markets are, and what may be needed.”“The markets are not self-correcting,” the aide said. “If they continue to not self-correct over the next several months, is there a federal response? There might be more federal intervention that’s needed. We’ll proceed cautiously, and that would be next year."Both chairmen are acting at the direction of Pelosi, who told them to figure out what happened and demonstrate that they are on top of the situation, the officials said.Pelosi said Tuesday on MSNBC that she expects a “restructuring” of the mortgage giants Fannie Mae and Freddie Mac “in the next Congress with a new president.”“Are they quasi-governmental organizations, are they quasi-nongovernmental organizations? Should they just be share hold private institutions?” she said. “We have to examine that. And I've asked the chairmen — Chairman Frank and the Chairman Waxman, the chairman of our Oversight and Reform Committee, to take a look at both of those.”