Phil Angelides, who chaired the US Financial Crisis Inquiry Commission (FCIC) and raged at bonus-obsessed bankers, has abandoned his plan to cash in on the chaos in the mortgage market.
The veteran Californian politician helped to set up a company called Mortgage Resolution Partners, which promised to use its "legal and political leverage" to acquire distressed mortgages.
It told potential investors that it planned to restructure the mortgages to allow homeowners to stay in their homes, and cast itself as a potential solution to the US foreclosure crisis.
"We just might do a good thing for America, and along the way get a great return on investment," it said – but critics painted Mr Angelides as a hypocrite after his commission concluded the credit crisis was a man-made disaster born of greed and hubris and the failure of banks and regulators to rein these tendencies.
Mortgage Resolution Partners was telling investors its political connections were part of a "secret formula" for negotiating deals to buy portfolios of distressed mortgages, with returns of perhaps 20 per cent annually.
Mr Angelides' chairmanship of the fund attracted the interest of the powerful House of Representatives Oversight Committee, which sent a letter on the subject to the US Secretary for Housing and Urban Development on February 10. Yesterday it emerged that Mr Angelides had stood down on 27 January.
Mr Angelides has "returned to his business and civic commitments", his spokesman said.
A former Treasurer of California, Mr Angelides has been tipped as a future Treasury secretary in the Obama administration. He appeared to burnish his credentials as head of the FCIC, where he was the scourge of bankers who testified on the causes of the financial crisis. He savaged Goldman Sachs boss Lloyd Blankfein for the investment bank's trading in mortgage securities, likening him to a used-car salesman who knew he was selling bangers with faulty brakes.
However, the FCIC failed to reach a bipartisan conclusion on the crisis, and the chairman's focus on failures at banks and investment firms angered the Republican minority, which pinned the blame on global imbalances or the state-sponsored mortgage finance firms Fannie Mae and Freddie Mac.
* This article has been amended to make clear that Phil Angelides stepped down from his chairmanship of MRP on 27 January and that, while he had helped to set up the firm, he had not "set it up" in the sense of being an original founder. His representative has told us that he had no knowledge of interest by the House of Representatives Oversight Committee in his chairmanship prior to his resignation. He stood down because "the initial research and development work for MRP [was] near conclusion".