Monday, October 06, 2008

Politicized house hearing today

The House Committee on Oversight and Government Reform is holding hearings today on the financial crisis in which they will unmercifully attack Lehman CEO Dick Fuld. The tone was set at the outset by Chairman Henry Waxman whose opening remarks were a litany of blame with no balance whatsoever. He had no suggestions and no recognition of the fact that the Democrats in general were the most aggressive supporters of the expansion of home lending, even mandating that the GSE's, Fannie and Freddie, seek out loans from home buyers who were unqualified for conventional loans. In Rep. Waxman's view the focus now is blame and channeling resentment into political gain and enhancing his own reputation. In a market as fragile as this one, and broken may be a better word than fragile, Rep. Waxman's approach is pretty much like throwing kerosene on a fire.

The ranking Republican member of the committee also was allowed to make opening remarks following Waxman. Rep. Tom Davis of Virginia had comments that were thoughtful, balanced, and constructive. He did not defend "either side of the aisle or either chamber" in some of the wrong headed decisions of the past decade such as the unleashing of the GSE's into new territory. He cautioned that words had power, in contributing to the radical and swift declines of companies and "in what we say today". He came across as a moderate with an understanding of markets and finance that is uncharacteristic for a member of Congress.

Now I assume as I write this that the examination of Mr. Fuld is underway. He is without question representative of the ethos of Wall Street during the last ten years that is now under attack. He stubbornly waited until too late to recognize and believe that his company could possibly go down. Without question he desperately wanted to save it, and today he will be set up by Waxman for eventual criminal prosecution.

The markets are ugly enough and this show will be just as bad.


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