by Michael Connor

There will no doubt be a fair amount of theater this week as the Financial Crisis Inquiry Commission holds its first public hearings exploring the causes of the 2008 financial crisis that nearly catapulted the U.S. and world economies into a 21st century Great Depression.

Front and center on the commission’s first Wednesday panel will be four men likely to be cast as star players.  They are CEOs of the nation’s top banking companies: Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JP Morgan Chase, John Mack of Morgan Stanley and Brian Moynihan of Bank of America.

As with much great theater, however, there’s another potential star in this drama that you might want to keep on eye on: the commission’s chairman, Phil Angelides.

While not a familiar name in most American households, Angelides is well-known to Californians.  A native of that state, he’s a career politician who most recently ran and lost as the Democratic candidate for Governor in 2006.

The financial industry is very familiar with him as well.  Angelides has been a leader in the corporate reform movement and has long been engaged in socially responsible investing.  As California’s state treasurer from 1999 to 2007, with responsibility for overseeing the California Public Employees’ Retirement System (CalPERS), the largest state pension fund in the nation, he pressed banks and Wall Street firms for greater disclosure and transparency for investments

Angelides was also among the most vocal critics calling for the resignation of New York Stock Exchange Chairman Richard Grasso, after the scandal over his $140 million pay package. “It is fundamentally important that Grasso resign so that the New York Stock Exchange can restore its moral authority,” he said at the time. Angelides also threatened to stop giving state business to Wall Street firms that didn’t meet conflict-of-interest standards.

So what can we expect from Angelides as chair of the federal commission?  He and the commission’s vice chair, Bill Thomas, a Republican and former Congressman, have hired a staff of professional lawyers and investigators.  They’re charged with identifying the causes of the financial meltdown and maybe (just maybe) reforms that might prevent another one from happening any time soon.   Their full report is due December 2010.

In a video interview last September with Nightly Business Report’s Darren Gersh, Angelides laid out an ambitious agenda for the commission.   Drawing conclusions about what really happened, he said, is critical.  What role did credit rating agencies play?  What was happening in the mortgage markets?  What did regulators do, or not do?

The commission is likely to identify criminal behavior, Angelides told Gersh, though its goal is not a “star chamber” proceeding where investigators “line 20 perps up against a wall.”  Indeed, Angelides notes, it’s likely that the commission will identify much that’s non-criminal, “egregious practices that we don’t want repeated again” but which were “applauded” only a few years ago.

There’s an understandable tendency by pundits and public alike to view the likely outcomes of this process with some skepticism.   There doesn’t appear to be any serious consensus on potential reform of the finance industry; in fact, not much has changed, and with Wall Street likely to announce a new round of enormous bonus awards this week, bad habits are seemingly being reinforced.

The process will play out, and if we’re lucky, it will establish at least some official record of events in addition to the inevitable theater that surrounds such hearings and investigations.  But the results need not be entirely without merit.  The 9/11 Commission appointed by President George W. Bush – officially known as the National Commission on Terrorist Attacks Upon the United States – did not rock the world with its revelations, but it did at least generate a factual basis for later discussion and debate.

The hope is that Angelides, together with his fellow commissioners and staff, will be able to build sufficient consensus around some scenarios and theories regarding causes of the financial meltdown.  And from that, hopefully, will emerge some consensus for reform.   It’s probably wishful thinking, but in the absence of some leadership on these issues, we’re likely doomed to have this awful bit of financial history repeat itself, probably not far into the future.

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