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Ferdinand Pecora and the Repudiation of Wall Street's "You're Just Not Sophisticated Enough to Get It" Argument
on October 21, 2010
Michael Perino presents the definitive account of a chapter of our national history that has too quickly receded from our collective memory. In 1933, four years after the Great Crash, although "banksters" of Wall Street were decried for their arrogance and deceit throughout America, the politicians in Congress seemed poised to capitulate to the perennial Wall Street argument that "finance was just too complicated to delegate to the democratic process." The implicit invitation from Wall Street: Just trust us. We know what we are doing. We are essential to the American economy. Leave all regulation to us. The math is just too hard, the vocabulary just too arcane, the stakes just too high. If that sounds familiar, it should: the argument has been made at every juncture where the regulation of finance is at stake.
Perino gives us the account of how that entire system of thinking--for one of the first, and frankly, one of the last times in our nation's history--was dumped on its head by the scrappy former District Attorney, Ferdinand Pecora. In the span of just ten days, with only a few weeks' preparation, this lawyer--no finance whiz--revealed in plain terms the extent of the deceit that created the deluge of participation by Moms and Pops throughout the country in the nation's securities markets. Rather than people going simply crazy for the thrills of market speculation, many of those who lost their savings in the stock market were duped into participation by slick, persistent salesmen armed with outright lies about the reliability of the securities they peddled. Perino's presentation of some of the letters written to Pecora during this investigation is particularly harrowing.
Many others have commented, at length, about the parallels between the aftermath of the Financial Crisis of 2009 and the aftermath of the Great Depression. But what this book does is remind us not just of parallels--and there are many--but also the power of a single individual to change the tenor of an entire political discourse. In Perino's masterful hands--this is one of the most lucidly written, capaciously researched, and entertainingly presented books to come out in financial history in the past decade--we see the sheer power that one individual can exert against seemingly impossible odds.
This book will be interesting and engaging to historical buffs, those interested in finance, and, quite frankly, any Scott Turrow or John Grisham fans. The second half especially unfolds as a courtroom drama, with twists and turns that will surprise you, even though you know the end result from reading the introduction. And besides, at just a few hundred pages, it is a remarkably slim volume for so much information. I'd give it six stars if I were able.