The chief executives of Wall Street's biggest firms, swimming in bonuses but sinking fast in public esteem, will troop to Capitol Hill on Wednesday to face questioning about the global financial crisis.
With U.S. unemployment near a 26-year-high after the worst recession in decades, public fury is growing over the crisis, taxpayer bailouts and huge bonuses for bankers at firms such as Goldman Sachs and JPMorgan Chase.
The CEOs of both firms, and others, will testify at the first hearing of the Financial Crisis Inquiry Commission, created by Congress to examine the roots of the 2008 banking and capital markets debacle that shook the world.
The commission's hearing could fuel popular resentment of the banks and at the government's role in rescuing a powerful industry seen by many Americans as greedy and irresponsible.
The basic causes of the crisis are known. From a real estate bubble and subprime mortgages, to runaway securitization and exotic debt instruments, the financial system failed spectacularly in the final months of the Bush administration.
The 10-member commission, led by former California State Treasurer Phil Angelides, may be hard-pressed to unearth new revelations on that score, but its work is still expected to have an impact, according to analysts.
"We're in a very volatile period now, with all the bonuses and with the hearing starting tomorrow," said Greg Valliere, policy analyst at investment advisory firm Soleil Securities.
"The hearings could be explosive and further intensify public indignation… You just have to wonder if the politicians can contain the anger," he said.
The panel, due to report by December 15, is modeled after the Pecora Commission, which investigated the Wall Street crash of 1929.
The hearings will unfold with the U.S. Senate Banking Committee engaged in sensitive closed-door negotiations on a sweeping overhaul of financial regulation, the aim being to prevent another banking crisis in the future.
The Obama administration and some senators are concerned about the timing and potential impact of the commission's hearings, said Joseph Engelhard, a policy analyst at investment advisory firm Capital Alpha Partners.
Worries center on "any revelation which creates a populist outburst that could possibly derail compromises that are being made on the Hill," he said.
But at least one member of the banking committee, Senator Bob Corker, told Reuters that he looks forward to the commission hearings and what they will reveal.
"The commission meetings, from my viewpoint, are nothing but helpful… I'm actually meeting with some of the witnesses while they're in town. It's all good as far as I'm concerned," said Corker, a Republican, in an interview.
