WASHINGTON (AFP)--U.S. lawmakers voted Wednesday to create a
9/11-style commission of experts to probe the causes of last year's
devastating financial meltdown and to draw lessons to prevent its
recurrence.
The vote in the House of Representatives coincided with a new
study that accused U.S. and foreign banks of deliberate culpability
in the collapse that engulfed the U.S. and world economy.
The House voted 367-59 for a bill aimed at curbing financial
fraud that included the proposal for an independent panel modeled
on the bipartisan commission that investigated the Sept. 11 attacks
of 2001.
House Speaker Nancy Pelosi welcomed passage of the "critical
bill," which requires the new commission to report back by
mid-December 2010.
"Americans must be assured that we are taking every step
possible to protect their interests and to prevent the misuse or
abuse of their hard-earned dollars," she said.
The committee, which would also probe the U.S. government's
series of hefty financial bailouts, would hold public hearings and
would have subpoena power to compel testimony from reluctant
witnesses.
Republican Representative Darrell Issa, who has been pushing for
the new commission since last fall, said: "You cannot solve a
problem until you've accurately diagnosed it.
"A truly independent and nonpartisan commission can put forward
an assessment that will help us avoid repeating the mistakes that
got us into this crisis in the first place."
The Senate, which approved its own version of the bill in late
April, must now vote on the House version in order to send it to
President Barack Obama to sign into law.
The independent inquiry would comprise 10 members drawn from
U.S. citizens with "significant experience in such fields as
banking, regulation of markets, taxation, finance, economics and
housing."
Six of the members would be chosen by Democratic leaders in
Congress and four by Republicans, a composition that drew protests
from opposition members who noted that the 9/11 commission was
split 50-50 between the two parties.
And while Democrats blame Republican laissez-faire policies,
Republicans point to their rivals' strong past support for two
busted government-backed mortgage lenders - Freddie Mac and Fannie
Mae - as a major factor.
The commission would have a wide-ranging remit to examine the
role of U.S. regulators and the Federal Reserve, along with
companies' accounting practices, executive pay schemes and use of
exotic investment tools.
Possible fraud, the controversial role of credit risk agencies
and short-selling on the markets are also listed in the legislation
for investigation.
In its new report, the Center for Public Integrity, meanwhile,
named 25 "subprime" mortgage companies whose risky lending was
blamed for the U.S. property market collapse that triggered a
global tumult.
Many of the lenders were either controlled by U.S. and European
banks, or couldn't have indulged in their high-risk lending spree
without the connivance of banks, the investigative journalism group
said.
"The mega-banks that funded the subprime industry were not
victims of an unforeseen financial collapse, as they have sometimes
portrayed themselves," the center's executive director, Bill
Buzenberg, said.
"These banks were deliberate enablers that bankrolled the type
of lending that's now threatening the financial system," he
said.
The center said that from 2005 to 2007, the "Subprime 25"
accounted for nearly $1 trillion or about 72% of loans extended to
risky borrowers who wouldn't normally have qualified for a
mortgage.
Four of them have received U.S. bailout funds, including insurer
American International Group (AIG) and banking behemoth Citigroup
(C).
Top of the list with at least $97.2 billion in subprime loans
was Countrywide Financial, which was bought by Bank of America
(BAC) last year to avert bankruptcy for the nation's largest
independent mortgage company.
The top foreign-owned lender at number nine was HSBC Finance,
part of the U.K.-based banking titan HSBC. EquiFirst (16th on the
list) was shut down by its U.K. owner Barclays Bank in
February.