How Finance Rigs the Rules of the Market to Its Own Advantage
A new book by a pair of academics explains how banks undermined post-WWII regulatory safeguards to sabotage the functioning of the free market
In January 1933, Ferdinand Pecora, a “soft-spoken son of Italian immigrants,” assembled a committee to investigate what in the hell led to the 1929 stock market crash. There were, of course, many fathers of the Great Depression, but a 2011 Smithsonian article lays out one of the basic underpinnings of the longest and deepest financial calamity in American history:
“The ‘Pecora commission’ [made] front-page news when he called Charles Mitchell, the head of the largest bank in America, National City Bank (now Citibank), as his first witness. ‘Sunshine Charley’ strode into the hearings with a good deal of contempt for both Pecora and his commission. Though shareholders had taken staggering losses on bank stocks, Mitchell admitted that he and his top officers had set aside millions of dollars from the bank in interest-free loans to themselves. Mitchell also revealed that despite making more than $1 million in bonuses in 1929, he had paid no taxes due to losses incurred from the sale of diminished National City stock — to his wife. Pecora revealed that National City had hidden bad loans…
