Washington : Senior US regulators, including outspoken Federal Deposit Insurance Corp Chairman Sheila Bair, were due to tell their side of the story yesterday to a commission examining the origins of the 2008 financial crisis.
The 10-member panel, in its first public hearing, heard a tale of misjudgments and regret from top Wall Street bankers on Wednesday, but did not get an outright apology or any new explanations for the debacle that shook world markets.
Four of Wall Street's top bankers acknowledged taking on too much risk and having choked on their own financial cooking in the subprime mortgage market, but they defended their pay packages and the huge size of their businesses.
The Financial Crisis Inquiry Commission, created by Congress and charged with issuing a report by December 15, will get a different view of matters from Bair and Securities and Exchange Commission Chairman Mary Schapiro.
Deeply involved
Both are the leaders of agencies that were deeply involved in the run-up to the crisis that peaked in late 2008 after the collapse of former investment banking giant Lehman Brothers.
Bair made waves this week with an FDIC proposal to tie banker pay to deposit insurance fees. The idea, opposed by other bank regulators, calls for banks with risky compensation schemes to pay higher levels of deposit insurance premiums.
It reflects Bair's readiness to experiment with using the FDIC's policy levers to influence bank behaviour in ways that transcend the agency's main job of insuring deposits.
Bair was an early critic of subprime mortgage market excesses that helped inflate a historic housing price bubble well into 2007.
When it broke, the aftershocks paralysed capital markets and panicked the Bush administration.
Multi-billion-dollar taxpayer bailouts and the deepest recession since the 1930s followed, saddling President Barack Obama with profound economic challenges and a political backlash that is still far from over.
The commission, chaired by former California State Treasurer Phil Angelides, is beginning its work amid rising public fury over the crisis, its aftermath and what to do to prevent something like it from happening again.
"We have a lot of digging to do and I believe our work will illuminate what happened. It will be the last and best chance for the American people to examine these issues," Angelides said after Wednesday's session.
Schapiro, whose agency has been widely criticized for failing to detect problems such as the massive Bernard Madoff investment scam, said on Wednesday that the SEC was giving its enforcement staff more tools to root out financial fraud.
