US Outlook: The calls for austerity grow stronger by the day in the US. So it is with a heavy heart that Congress must surely turn down a spending request this week by the Financial Crisis Inquiry Commission, the body set up to examine the causes of the credit crunch.
The FCIC just gave us two days of theatre, as executives from AIG and Goldman Sachs slugged it out over who was to blame for AIG's collapse. The star was Joseph Cassano, appearing in public for the first time since CNN here put him on its 10 "Most Wanted" list of credit-crisis villains. He told us that if only he hadn't been sacked as AIG's derivatives chief, he would have negotiated a tougher line with its trading partners and saved the taxpayer billions of bailout dollars.
This is all such great stuff, the FCIC argues, that it needs a 23 per cent increase in its budget. As well as publishing "the definitive, historical, comprehensive look" at what led to the crisis (a spokesman described it to me last night as "an autopsy"), it plans to make hundreds of interviews with witnesses and a vast database of subpoenaed documents available online for posterity. The chairman Phil Angelides and his fellow commissioners have long complained their initial $8m (£5.3m) budget was too tiny. Now, they hope to requisition a further $1.8m, in an amendment to a war funding bill.
Congress loses that sort of money down the back of the sofa, of course, but appeasing the austerity hawks requires making an example of wasteful spending. The sad fact is that the FCIC duplicates work being done comprehensively elsewhere. There have been numerous Congressional panels, led by the Senate's Permanent Subcommittee on Investigations, which roasted Goldman executives and mortgage traders for 11 hours back in May. We learnt the minutiae of the collapse of Lehman Brothers from a court-appointed examiner, who unearthed how the investment bank hid the size of its balance sheet from regulators. Having stress-tested the banks last year, regulators themselves are learning that they need to monitor the true health of our interconnected financial markets.
And now it seems we will have Wall Street reform enacted within weeks, to rectify many of the loopholes and oversights that were exposed by the crisis – months before the FCIC is meant to produce its narrative.
The commission has been modelled on the work of the 9/11 Commission, which set out the events that led to the terror attacks of 2001. Its big hope is that, like its predecessor, its report could be a surprise bestseller. That makes the exercise little more than a government-sponsored book deal.
Is it needed? Publishers have a long line of authors cued up to produce the definitive tale of the crisis – and I can tell you that most of those don't need a $9.8m advance.Reuse content