A star cast of CEOs appeared before the Financial Crisis Inquiry Commission in Washington on Wednesday. However, the spotlight was clearly on Goldman Sachs (GS), the investment bank that has become a lightning rod of controversy because of its large bonus packages and the fact that it has enjoyed a year of record profits, emerging out of the financial crisis.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%Philip Angelides, the commission chairman, spent the opening 15 minutes of his questioning directed solely at Lloyd Blankfein, CEO of Goldman (pictured). The two clashed openly, interrupting each other's statements in a testy session. Angelides, who kept returning with additional questions for Blankfein, didn't buy many of his arguments and was particularly hard when asking whether Goldman deliberately sold debt products tied to mortgages that it knew were declining in value.

"It sounds to me like selling a car with faulty brakes, and then buying an insurance policy on the buyer of those cars," said Angelides.

Blankfein, who admitted in his opening statement that during good times the need to expand market share can be "blinding," said his firm was only fulfilling its role in the financial markets. "We were doing what capital markets do -- which is making markets," he said.

Angelides responded that he found it "troublesome" that Goldman never took the responsibility to ensure the products it was selling were good.

Minus One Heavy Hitter


The other CEOs at the table included Jamie Dimon of JPMorgan Chase (JPM), Brian Moynihan of Bank of America (BAC) and John Mack, the former CEO of Morgan Stanley (MS), each of whom in turn admitted in their opening statements that their firms made mistakes that led to the financial crisis. Conspicuous by his absence was Citigroup (C) CEO Vikram Pandit, who didn't get invited to today's hearing, even though his firm is the surviving bank that posted the deepest loss in 2008 -- $27.7 billion.

The bipartisan commission was appointed last year by Congress. It's led by Chairman Angelides, a Democrat and former California Treasurer, and Bill Thomas, a Republican and former congressman, also from California. The 10-member commission will examine the causes of the financial and economic crisis of the last couple of years and produce a report by Dec. 15.

While there was some theater to the back-and-forth questioning of Blankfein, some critics say it didn't achieve much by revealing any new information.

Lofty Standards to Live Up To

"The purpose of a public hearing is not to collect random information, but rather to tell the people a story -- the story of why this happened," says Martin Berg, editor of wheresourmoney.org, a project of the nonprofit Consumer Education Foundation. "However, nobody learned anything new. There's already been half a dozen books on the subject, why not just publish a book list and save everybody a lot of trouble if you can't organize a hearing that's meaningful."

The Financial Crisis Inquiry Commission has been modeled after the Pecora Commission that investigated the reasons behind the 1929 stock market crash and whose recommendations led to a raft of federal banking laws. Today's group also takes lessons from the more recent 9/11 Commission, a bipartisan committee that investigated the terrorist attacks of Sept. 11, 2001.

Angelides is aware of the lofty expectations set by the previous commissions. "If we do this right, our work can serve as an antidote -- much as the Pecora hearings did in the l930s -- to the kinds of financial market practices that none of us would want to see be repeated ever again," said Angelides. He says his goal is to conduct as thorough an investigation as the 9/11 Commission did. That panel, he noted, conducted over 1,200 interviews, reviewed over 2.5 million pages of documents, and held 12 days of public hearings.

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