Financial Crisis Inquiry Wrestles With Setbacks

Sewell Chan and Eric Dash|The New York Times

The panel established by Congress to investigate the causes of the financial crisis has been hobbled by delays and internal disagreements and a lack of focus, according to interviews with a majority of its members and government officials briefed on its work.

In recent months, a top investigator resigned, frustrated by delays in assembling a staff. Behind closed doors the panel’s chairman and vice chairman have had heated disagreements over whether to make public preliminary findings or revelatory documents. Entities like Citigroup and the Treasury have complained that the panel’s requests for information have been vague and voluminous.

The people appointed to the Financial Crisis Inquiry Commission last July, six by Democrats and four by Republicans, say they hope to publish, by the Dec. 15 deadline, a volume much like the 9/11 Commission report, which was acclaimed for its narrative sweep and became a surprise best seller.

Chairman Phil Angelides with Vice Chairman Bill Thomas.
Tim Sloan | AFP | Getty Images

But that goal seems increasingly out of reach, given what the commissioners themselves acknowledge has been a haphazard approach and a lack of time and resources. Given the delays, the commission’s impact on policy could be modest; the House has already voted on a sweeping financial reform bill, and the Senate could vote on it by summer.

The commission has been set back not so much by partisan bickering but by the size of its task: examining and explaining a crisis whose complex and often technical causes continue to befuddle ordinary Americans.

In an interview, the commission’s chairman, Phil Angelides, said the panel was struggling to satisfy a broad mandate to examine the role of 22 factors in bringing about the crisis. He pointed out that the panel had a budget of just $8 million, compared with the $38 million spent by a federal bankruptcy trustee who dissected the collapse of Lehman Brothers.

Even though the panel is backward-looking and will not issue formal recommendations, Mr. Angelides said he hoped its findings would be authoritative and useful for future policy makers.

But Bill Thomas, the Republican vice chairman of the panel and a former chairman of the House Ways and Means Committee, acknowledged, “We are limited by time.”

In interviews, nearly all of the 10 commissioners agreed to discuss the panel’s work, though most declined to be quoted by name. Several urged patience and said the disagreements were a sign of healthy debate. “The proof will be in the outcome,” said Heather H. Murren, a political independent who was named to the commission by the Senate majority leader, Harry Reid, Democrat of Nevada.

But a few commissioners said they were concerned that Mr. Angelides was more interested in holding prominent hearings than in selecting a few targets for deep examination. For example, the chief executives of four Wall Street banks testified in January, and Alan Greenspan, the former Federal Reserve chairman, will testify on Wednesday. The commission has issued no subpoenas even though it has the power to do so.

The hearings this week will ostensibly focus on how subprime loans were packaged and originated, with a focus on Citigroup. Mr. Thomas acknowledged that the hearings were somewhat wide-ranging, likening them to a “Whitman’s Sampler” that will give a taste of the topics the final report will cover.

The commission’s executive director, J. Thomas Greene, was named in September but took several months to assemble a staff of 49, leading one investigator, Martin T. Biegelman, an expert on corporate fraud, to resign during the winter. Twelve staff members are on loan from agencies like the Federal Reserve. The commission struggled to hire researchers and investigators with expertise in areas like structured finance or accounting.

“We lost a fair amount of time on the front end,” said one commissioner, Keith Hennessey, a former economic adviser to President George W. Bush. “Part of it was negotiations between Angelides and Thomas on the senior staff, but I don’t know why it took so long to assemble a full staff.”

Commissioners also said that Mr. Angelides and Mr. Thomas recently clashed over whether to release preliminary staff reports or some of the 500,000 pages of materials that had been gathered so far. When Mr. Angelides floated the idea of releasing some of the materials to reporters, Republicans threatened to look into the panel’s work if they took control of the House, a person briefed on the dispute said. A spokesman for the panel denied that the exchange had occurred.

Ms. Murren said that it made sense to release some early findings. “A large part of our responsibility is to allow the American people to see this process as transparent and understandable,” she said. “Most people see finance as incredibly obscure. I think it would be helpful to put out a set of facts that we can all agree upon. Put them in the public domain.”

Tensions were exacerbated, two members said, after Mr. Angelides was linked last month to an investigation by the Securities and Exchange Commission into donations by a JPMorgan Chase executive to his 2002 re-election campaign for California treasurer. Mr. Angelides was not accused of wrongdoing.

In August 2002, the S.E.C. found, David A. Coulter, a vice chairman of JPMorgan Chase, sent the bank’s executive committee “a handwritten note stating that the California treasurer is an important client and soliciting their help in raising $10,000” for a fund-raiser in New York.

Mr. Coulter and other executives gave $9,000, and the bank later won work underwriting more than 50 bond sales, for which it was paid $37 million. Though Mr. Coulter did not work for JPMorgan Chase’s bond-underwriting subsidiary, the donation broke a rule that bans a broker-dealer from underwriting bonds within two years of making a political contribution to the issuer, the S.E.C. found.

Mr. Coulter, who now works at Warburg Pincus, declined to comment. Cathy Calfo, who managed Mr. Angelides’s campaign, said it “would have returned the contribution” had it known it was improper.

Sewell Chan reported from Washington, and Eric Dash from New York.