Congress speaks about financial crisis

October 6, 2008 7:00:37 PM PDT
Congress opened its first oversight hearings into the financial crisis, and there are a lot of people pointing fingers.

The hearing by the House Oversight Committee was the first of many. The task was to find out what went wrong and put measures in place to make sure it doesn't happen again.

The former CEO of now bankrupt Lehman Brothers testified on Monday.

Richard Fuld Junior was asked about millions in bonuses paid to top executives while even as the company was sliding into bankruptcy.

"Your company is now bankrupt, our economy is in a state of crisis and you get to keep $450 million dollars. I have a very basic question for you, is this fair?" said Rep. Henry Waxman (D) Los Angeles.

"When the company did well, we did well," said Fuld Jr.

Fuld denied that he painted a rosy picture publicly while internal company documents showed that Lehman faced the potentially big problems.

"I really can't speak to that because this document is not familiar to me, but if you tell me it's mine, then I believe you," said Fuld Jr.

Early on in the hearing, Republicans members of the committee tried to turn attention toward the failings of Democrats for not tightening controls on mortgage giants Fannie Mae and Freddie Mac.

"And we don't have anyone from Fannie Mae to start this out this is ridiculous," said Rep. John Mica (R) Florida.

On Monday afternoon Senator Barbara Boxer got into the blame game while touring bio-engineering labs at UC Berkeley. ABC7 News asked her what Congress could have done to prevent the crisis.

"In the 80's we had something called the Keating Five and what that was about was five senators Republicans and Democrats who decided that regulation was a bad thing," said Sen. Boxer.

Boxer launched into a partisan explanation of the savings and loan crisis, including John McCain's involvement with the Keating Five scandal. She followed that with shots at McCain's former economic advisor for being one of the architects of deregulation.

"Who led the charge on that in the 1990's ? Phil Gramm," said Sen. Boxer.

Across campus, former Labor Secretary and professor of economic policy Robert Reich says fixing the problem as for now, is taking a back seat to fixing the blame.

"The essential reality right now, four weeks before a presidential election, is that we have an economic meltdown and there is no leadership," said Reich.

John McCain's campaign, which has struggled since the meltdown, is attempting to change the subject by attacking Barack Obama, and his running mate is doing the same.

But ABC7'S political analyst says the really important issue is what will happen to the economy.

"Are we sliding into an official recession and if that happens then the debate will continue to be about economic issues and it'll be very hard for the Republicans to change the topic," said ABC7 News Political Analyst Bruce Cain, Ph.D.

Tuesday night's presidential debate will be McCain's next best chance at reversing his downward slide.


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