The Obama administration is proposing a sweeping overhaul of President Bush’s signature education law, No Child Left Behind, and will call for broad changes in how schools are judged to be succeeding or failing, as well as for the elimination of the law’s 2014 deadline for bringing every American child to academic proficiency.

Educators who have been briefed by administration officials said the proposals for changes in the main law governing the federal role in public schools would eliminate or rework many of the provisions that teachers’ unions, associations of principals, school boards and other groups have found most objectionable.

Yet the administration is not planning to abandon the law’s commitments to closing the achievement gap between minority and white students and encouraging teacher quality.

Significantly, said those who have been briefed, the White House wants to change federal financing formulas so that a portion of the money is awarded based on academic progress, rather than by formulas that apportion money to districts according to their numbers of students, especially poor students. The well-worn formulas for distributing tens of billions of dollars in federal aid have, for decades, been a mainstay of the annual budgeting process in the nation’s 14,000 school districts.

Peter Cunningham, a Department of Education spokesman, acknowledged that the administration was planning to ask Congress for broad changes to the No Child Left Behind law, but declined to describe the changes specifically.

He said that although the administration had developed various proposals, it would solicit input from congressional leaders of both parties in coming weeks to create legislative language that can attract bipartisan support. Some details of the president’s proposals are expected to be made public on Monday, when the president outlines his $3.8 trillion budget for the 2011 fiscal year. The changes would have to be approved by Congress, which has been stalemated for years over how to change the policy.

Currently the No Child Left Behind law requires the nation’s 98,000 public schools to make “adequate yearly progress” as measured by student test scores. Schools that miss their targets in reading and math must offer students the opportunity to transfer to other schools and free after-school tutoring. Schools that repeatedly miss targets face harsher sanctions, which can include staff dismissals and closure. All students are required to be proficient by 2014.

Educators have complained loudly in the eight years since the law was signed that it was branding tens of thousands of schools as failing but not forcing them to change.

The secretary of education, Arne Duncan, foreshadowed the elimination of the 2014 deadline in a September speech, referring to it as a “utopian goal,” and administration officials have since made clear that they want the deadline eliminated. In recent meetings with representatives of education groups, Department of Education officials have said they also want to eliminate the school ratings system built on making “adequate yearly progress” on student test scores.

“They were very clear with us that they would change the metric, dropping adequate yearly progress, and basing a new system on another picture of performance based on judging schools in a more nuanced way,” said Bruce Hunter, director of public policy for the American Association of School Administrators, who attended one of the meetings.

The current system issues the equivalent of a pass-fail report card for every school each year, an evaluation that administration officials say fails to differentiate among chaotic schools in chronic failure, schools that are helping low-scoring students improve, and high-performing suburban schools that nonetheless appear to be neglecting some low-scoring students.

Instead, under the administration’s proposals, a new accountability system would divide schools into more categories, offering recognition to those that are succeeding and providing large new sums of money to help improve or close failing schools. A new goal, which would replace the 2014 universal proficiency deadline, would be for all students to leave high school “college or career ready.” Currently more than 40 states are collaborating, in an effort coordinated by the National Governors Association and encouraged by the administration, to write common standards defining what it means to be a graduate from high school ready for college or a career. The new standards will also define what students need to learn in earlier grades to advance successfully toward high school graduation.

The administration has already made its mark on education through Race to the Top, a federal grant program in which 40 states are competing for $4 billion in education money included in last year’s federal stimulus bill. In his State of the Union address, Mr. Obama hailed the results so far of that competition, which has persuaded states from Rhode Island to California to make changes in their education laws. States that prohibit the use of test scores in teacher evaluations, for example, are not eligible for the funds. The competition has also encouraged states to open the door to more charter schools, which receive public money but are run by independent groups.

Now the administration hopes to apply similar conditions to the distribution of the billions of dollars that the Department of Education hands out to states and districts as part of its annual budget.

“They want to recast the law so that it is as close to Race to the Top as they can get it, making the money conditional on districts’ taking action to improve schools,” said Jack Jennings, president of the Center on Education Policy, who attended a recent meeting at which administration officials outlined their plans in broad strokes. “Right now most federal money goes out in formulas, so schools know how much they’ll get, and then use it to provide services for poor children. The department thinks that’s become too much of an entitlement. They want to upend that scheme by making states and districts pledge to take actions the administration considers reform, before they get the money.”

One section of the current Bush-era law has required states to certify that all teachers are highly qualified, based on their college coursework and state-issued credentials. In the Race to the Top competition, the administration has required participating states to develop the capability to evaluate teachers based on student test data, at least in part, and on whether teachers are successful in raising student achievement.

Educators who have talked to the administration said the officials appeared to be considering inserting similar provisions to the main education law, by requiring the use of student data in teacher evaluation systems as a condition for receiving federal education money. Mr. Duncan has publicly endorsed such an approach, Mr. Cunningham said.

The No Child law, has been praised for focusing attention on achievement gaps, but it has also generated tremendous opposition, especially from educators, who contend it sets impossible goals for students and schools and humiliates students and educators when they fall short. The law has, to date, labeled some 30,000 schools as “in need of improvement,” a euphemism for failing, but states and districts have done little to change them.

The last serious attempt to rewrite the law was in 2007. That effort collapsed, partly because teachers unions and other educator groups opposed an effort to incorporate merit pay provisions into a rewritten law. Earlier this month, Mr. Duncan and more than a dozen other administration officials took steps toward organizing a new rewrite, meeting with the Democratic chairmen and ranking Republican members of the education committees in both houses of Congress.

More Articles in Education » A version of this article appeared in print on February 1, 2010, on page A10 of the New York edition.

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Saints fever spreads

January 24, 2010

St. Louis Cathedral, Jackson Square, New Orleans, 1-24-10

WHILE supply-side catechism insists that lower taxes are a growth tonic, the theory also argues that if you want less of something, tax it more. The economy desperately needs less of our bloated, unproductive and increasingly parasitic banking system. In this respect, the White House appears to have gone over to the supply side with its proposed tax on big banks, as it scores populist points against the banksters, too.

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Paul Sahre and Jonas Beuchert

Not surprisingly, the bankers are already whining, even though the tax would amount to a financial pinprick — a levy of only 0.15 percent on the debts (other than deposits) of the big financial conglomerates. Their objections are evidence that the administration is on the right track.

Make no mistake. The banking system has become an agent of destruction for the gross domestic product and of impoverishment for the middle class. To be sure, it was lured into these unsavory missions by a truly insane monetary policy under which, most recently, the Federal Reserve purchased $1.5 trillion of longer-dated Treasury bonds and housing agency securities in less than a year. It was an unprecedented exercise in market-rigging with printing-press money, and it gave a sharp boost to the price of bonds and other securities held by banks, permitting them to book huge revenues from trading and bookkeeping gains.

Meanwhile, by fixing short-term interest rates at near zero, the Fed planted its heavy boot squarely in the face of depositors, as it shrank the banks’ cost of production — their interest expense on depositor funds — to the vanishing point.

The resulting ultrasteep yield curve for banks is heralded, by a certain breed of Wall Street tout, as a financial miracle cure. Soon, it is claimed, a prodigious upwelling of profitability will repair bank balance sheets and bury toxic waste from the last bubble’s collapse. But will it?

In supplying the banks with free deposit money (effectively, zero-interest loans), the savers of America are taking a $250 billion annual haircut in lost interest income. And the banks, after reaping this ill-deserved windfall, are pleased to pronounce themselves solvent, ignoring the bad loans still on their books. This kind of Robin Hood redistribution in reverse is not sustainable. It requires permanently flooding world markets with cheap dollars — a recipe for the next bubble and financial crisis.

Moreover, rescuing the banks yet again, this time with a steeply sloped yield curve (that is, cheap short-term money and more expensive long-term rates), is not even a proper monetary policy action. It is a vast and capricious reallocation of national income, which would be hooted down in the halls of Congress, were it properly brought to a vote.

National economic policy has come to this absurd pass because for decades the Fed has juiced the banking system with excessive reserves. With this monetary fuel, the banks manufactured, aggressively at first and then recklessly, a tide of new loans and deposits. When Wall Street’s “heart attack” struck in September 2008, bank liabilities had reached 100 percent of gross domestic product — double the ratio of a few decades earlier.

This was a measurement of the perilous extent to which bad investments, financed by debt, had come to distort the warp and woof of the economy. Behind the worthless loans stands a vast assemblage of redundant housing units, shopping malls, office buildings, warehouses, tanning salons and fast food restaurants. These superfluous fixed assets had, over the past decade, given rise to a hothouse economy of jobs that have now vanished. Obviously, the legions of brokers, developers, appraisers, contractors, tradesmen and decorators who created the bad investments are long gone. But now the waitresses, yoga instructors, gardeners, repairmen, sales clerks, inventory managers, office workers and lift-truck drivers once thought needed to work at these places are disappearing into the unemployment statistics, as well.

The baleful reality is that the big banks, the freakish offspring of the Fed’s easy money, are dangerous institutions, deeply embedded in a bull market culture of entitlement and greed. This is why the Obama tax is welcome: its underlying policy message is that big banking must get smaller because it does too little that is useful, productive or efficient.

To argue, as some conservatives surely will, that a policy-directed shrinking of big banking is an inappropriate interference in the marketplace is to miss a crucial point: the big Wall Street banks are wards of the state, not private enterprises. During recent quarters, for instance, the preponderant share of Goldman Sachs’ revenues came from trading in bonds, currencies and commodities.

But these profits were not evidence of Mr. Market doing God’s work, greasing the wheels of commerce and trade by facilitating productive financial transactions. In fact, they represented the fruits of hyperactive gambling in the Fed’s monetary casino — a place where the inside players obtain their chips at no cost from the Fed-controlled money markets, and are warned well in advance, by obscure wording changes in the Fed’s policy statements, about any pending shift in the gambling odds.

To be sure, the most direct way to cure the banking system’s ills would be to return to a rational monetary policy based on sensible interest rates, an end to frantic monetization of federal debt and a stable exchange value for the dollar. But Ben Bernanke, the Fed chairman, and his posse are not likely to go there, believing as they do that central banking is about micromanaging aggregate demand — asset bubbles and a flagging dollar be damned. Still, there can be no doubt that taxing big bank liabilities will cause there to be less of them. And that’s a start.

David Stockman, a director of the Office of Management and Budget under President Ronald Reagan, is working on a book about the financial crisis.

More Articles in Opinion » A version of this article appeared in print on January 20, 2010, on page A21 of the New York edition.

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If you’re not scared as hell you should be.

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Two days of Financial Crisis Inquiry Commission hearings have me rattled about how little has changed about our financial system and how much is still at risk. They also have me wondering this: where the hell is the media?

For the first day of panels, reporters were squeezed together in the back rows after filling more reserved seating than I’ve seen at any prior hearing during this session of Congress.

But, as I wrote previously, after the Banksters had preened for the cameras and recited their testimony like four schoolboys BS-ing their way through an oral report, the press vanished, missing out on more candid and informative witnesses.

Yesterday, day two of the hearings, maybe a dozen reporters attended, less than that for the press conference afterwards. What did they miss?

For starters, FDIC Chairman Sheila Bair testified that the credit-default swaps (CDS) market still poses a systemic threat and that even she can’t access CDS information to accurately assess financial institutions’ exposure.

Bair and SEC Chairman Mary Schapiro were in agreement with Commission Chair Phil Angelides’ assessment that the credit rating agencies were “proved to be worthless and remain so today,” given that they are paid by the very Wall Street firms who are profiting from AAA-rated securitized assets.

State Attorneys General Lisa Madigan of Illinois and John Suthers of Colorado revealed that not only were their warnings about unscrupulous and predatory lending practices ignored, but that their investigations were actively thwarted by federal regulators who in turn did nothing–under the guise of preemption.

Madigan also described how rate sheets reveal that Wall Street paid mortgage brokers and loan officers more for risky mortgages–with low teaser rates, pre-payment penalties, low- or no documentation–because the consequent higher interest rate paid by the borrower would bring in more income. Wall Street wasn’t the victim of bad underwriting that it claims to be; indeed it incentivized it.

Denise Voigt Crawford, a Texas securities regulator for 28 years, discussed the revolving door between agencies and the industries they regulate, and the “chilling effect [it has] on the zeal with which you regulate.”

Schapiro, Bair, and Madigan argued that Wall Street should have to “skin in the game” when securitizing assets. As things stand now they sell them with a bought and paid for AAA-rating, and then take their profits even if the underlying assets are worthless. Madigan said of mortgage-backed securities, “At the end of the day, the people who had the risk were on the very front end, the borrower, and on the very back end, the investor. All the other market participants were paid along the way, and they didn’t hold on to any of that risk.”

Bair said the agency that could have done something about subprime products early on– when it had a report on problems back in 2000–was the Fed.

“I think the only place to tackle that on a system-wide basis for both banks and non-banks was through…the Fed [which had] the authority to apply rules against abusive lending across the board to both banks and non-banks,” said Bair. “If we had had some good strong constraints at that time, just simple standards like you’ve got to document income and make sure they can repay the loan–not just at the start, but at the reset rate as well–we could have avoided a lot of this.”

So why didn’t the Fed and other federal agencies act?

“It can be very difficult to take away the punch bowl when, you know, people are making money,” said Bair. She also talked about “pushback” from both the industry and the Hill–as late as 2007– when the FDIC tried to “tighten up” on subprime mortgages and commercial real estate.

Reforms discussed included a systemic risk council, a consumer financial protection agency, an industry-funded mechanism so that large firms can be broken up and sold off without taxpayer money, greater disclosure of compensation structures, and a single clearinghouse for derivatives like credit-default swaps.

But the task of this Commission isn’t to open its hearings by announcing the necessary reforms. It’s to tell the story of what caused this meltdown, which should galvanize public demand for the necessary reforms. In that regard I think the Commission is off to a decent start. They are breaking down tough concepts, showing the interconnectedness between Wall Street, legislators and regulators, and fishing with dynamite when it comes to exposing bad actors.

But time is short–the FCIC’s report is due in December of this year. It’s going to have to be fearless, and build momentum quickly by bringing in big players and asking them tough questions. That’s the only way a bipartisan populist backlash will fight for reform –and it’s the only way the media might consider showing up too.

About Greg Kaufmann

Greg Kaufmann is a Nation contributor living in his disenfranchised hometown of Washington, DC. more…

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Conservative radio host http://topics.politico.com/index.cfm/topic/RushLimbaugh“>Rush Limbaugh and televangelist http://topics.politico.com/index.cfm/topic/PatRobertson“>Pat Robertson are being scolded for their http://www.politico.com/blogs/bensmith/0110/Robertson_Haiti_cursed_since_Satanic_pact.html“>comments in the immediate aftermath of an earthquake in Haiti that has killed tens of thousands, according to early estimates.

Critics from both the left and right are denouncing their remarks as insensitive to the disaster and attempts to score political points off human tragedy.

Speaking on his radio show Wednesday, Limbaugh said the earthquake has played into Obama’s hands, allowing the president to look “compassionate” and “humanitarian” while at the same time bolstering his standing in both the “light-skinned and dark-skinned black community in this country.”

He added: “We’ve already donated to Haiti. It’s called the U.S. income tax.”

Limbaugh’s comments were, in part, a riff on http://topics.politico.com/index.cfm/topic/HarryReid“>Sen. Harry Reid’s (D-Nev.) much publicized remark in a new book that Obama was able to win the election because he is “light-skinned” and lacks a “Negro dialect.”

But regardless of the intended context, Limbaugh’s comments have been widely panned.

“They are deeply insensitive,” said conservative commentator http://topics.politico.com/index.cfm/topic/PatBuchanan“>Pat Buchanan on MSNBC’s “Morning Joe.”

“The president speaks for the country when he says we’re going to go in there,” he said. “You want your whole nation, and it’s very positive. And I think Rush’s comments were cynical.”

Sitting next to Buchanan on set, host Joe Scarborough called Limbaugh’s comments “deplorable.”

“The insensitivity is stunning,” said the former Republican congressman.

Liberal commentators also quickly jumped on Limbaugh.

“Limbaugh did not know when to just shut up,” said liberal commentator Keith Olbermann on his MSNBC show “Countdown.” “Today he blamed communism for the poverty of Haiti, blamed President Obama for holding a news conference the day after this cataclysm when he did not hold one after the failed half-assed terror attempt in Detroit.” 

John Amato from the left-leaning website Crooks and Liars added that “with thousands of people dead already and as the suffering continues in Haiti, Limbaugh and his ilk only care about one thing: destroying Obama.”

The conservative media watchdog site Newsbusters stepped up to defend Limbaugh, saying his comments were not put in proper context, but very few others are backing the conservative firebrand’s latest controversial remarks.

While Limbaugh received a modicum of support, nobody of note has stepped up to defend Robertson’s claim that Haiti got hit by an earthquake because it is “cursed.”

Speaking about the disaster during his program “The 700 Club” on the Christian Broadcasting Network, Robertson said that when Haiti was still a French colony its leaders “swore a pact to the devil” to get out from “under the heel of the French.”

“They said, ‘we will serve you if you will get us free from the French.’ True story. And so, the devil said, ‘OK, it’s a deal,’” Robertson claimed, as was recorded and sent around by the liberal group Media Matters.

“But ever since they have been cursed by one thing after the other,” he continued. “That island of Hispaniola is one island. It is cut down the middle on the one side is Haiti the other is the Dominican Republic. Dominican Republic is prosperous, healthy, full of resorts, etc. Haiti is in desperate poverty.”

Robertson, who has a long history of making controversial remarks on his program, urged his followers to pray for the residents of Haiti and said that “out of this tragedy I’m optimistic something good may come.”

Speaking on ABC’s “Good Morning America,” White House adviser Valerie Jarrett said Thursday morning she was left “speechless” by Robertson’s remarks.

“That’s not the attitude that expresses the spirit of the president or the American people, so I thought it was a pretty stunning comment to make,” she said.

A statement from Robertson’s spokesman Chris Roslan tried to downplay the “cursed” remark.

“Dr. Robertson never stated that the earthquake was God’s wrath,” the statement read. “If you watch the entire video segment, Dr. Robertson’s compassion for the people of Haiti is clear. He called for prayer for them. His humanitarian arm has been working to help thousands of people in Haiti over the last year, and they are currently launching a major relief and recovery effort to help the victims of this disaster.”

Read More Stories from POLITICO
http://www.politico.com/news/stories/0110/31527.html“>White House scores key labor deal
http://www.politico.com/news/stories/0110/31532.html“>Obama soothes anxious Dems
http://www.politico.com/news/stories/0110/31514.html“>Reid can’t get past Lieberman flap
http://www.politico.com/news/stories/0110/31473.html“>Beck and CPAC: Outsider steps in
http://www.politico.com/news/stories/0110/31522.html“>Perry turns down nat’l edu. funds

Robertson and Limbaugh are actually liberals in the closet secretly alienating moderate conservatives and independents and pushing them to the middle and the left. Brilliant.

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

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Fred R. Conrad/The New York Times

Frank Rich

 

Barry Blitt

 

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.

The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

It’s against this backdrop that this week’s long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.

He wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened.

Angelides gets it. But he has a tough act to follow: Ferdinand Pecora, the legendary prosecutor who served as chief counsel to the Senate committee that investigated the 1929 crash as F.D.R. took office. Pecora was a master of detail and drama. He riveted America even without the aid of television. His investigation led to indictments, jail sentences and, ultimately, key New Deal reforms — the creation of the Securities and Exchange Commission and the Glass-Steagall Act, designed to prevent the formation of banks too big to fail.

As it happened, a major Pecora target was the chief executive of National City Bank, the institution that would grow up to be Citigroup. Among other transgressions, National City had repackaged bad Latin American debt as new securities that it then sold to easily suckered investors during the frenzied 1920s boom. Once disaster struck, the bank’s executives helped themselves to millions of dollars in interest-free loans. Yet their own employees had to keep ponying up salary deductions for decimated National City stock purchased at a heady precrash price.

Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)’s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault. Somewhere Pecora is turning in his grave

Rubin has never apologized, let alone been held accountable. But he’s hardly alone. Even after all the country has gone through, the titans who fueled the bubble are heedless. In last Sunday’s Times, Sandy Weill, the former chief executive who built Citigroup (and recruited Rubin to its ranks), gave a remarkable interview to Katrina Brooker blaming his own hand-picked successor, Charles Prince, for his bank’s implosion. Weill said he preferred to be remembered for his philanthropy. Good luck with that.

Among his causes is Carnegie Hall, where he is chairman of the board. To see how far American capitalism has fallen, contrast Weill with the giant who built Carnegie Hall. Not only is Andrew Carnegie remembered for far more epic and generous philanthropy than Weill’s — some 1,600 public libraries, just for starters — but also for creating a steel empire that actually helped build America’s industrial infrastructure in the late 19th century. At Citi, Weill built little more than a bloated gambling casino. As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth. Citi, that “innovative” banking supermarket, destroyed far more wealth than Weill can or will ever give away.

Even now — despite its near-death experience, despite the departures of Weill, Prince and Rubin — Citi remains as imperious as it was before 9/15. Its current chairman, Richard Parsons, was one of three executives (along with Lloyd Blankfein of Goldman Sachs and John Mack of Morgan Stanley) who failed to show up at the mid-December White House meeting where President Obama implored bankers to increase lending. (The trio blamed fog for forcing them to participate by speakerphone, but the weather hadn’t grounded their peers or Amtrak.) Last week, ABC World News was also stiffed by Citi, which refused to answer questions about its latest round of outrageous credit card rate increases and instead e-mailed a statement blaming its customers for “not paying back their loans.” This from a bank that still owes taxpayers $25 billion of its $45 billion handout!

If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, it’s because it fears no retribution. And it got more good news last week. Now that Chris Dodd is vacating the Senate, his chairmanship of the Banking Committee may fall next year to Tim Johnson of South Dakota, home to Citi’s credit card operation. Johnson was the only Senate Democrat to vote against Congress’s recent bill policing credit card abuses.

Though bad history shows every sign of repeating itself on Wall Street, it will take a near-miracle for Angelides to repeat Pecora’s triumph. Our zoo of financial skullduggery is far more complex, with many more moving pieces, than that of the 1920s. The new inquiry does have subpoena power, but its entire budget, a mere $8 million, doesn’t even match the lobbying expenditures for just three banks (Citi, Morgan Stanley, Bank of America) in the first nine months of 2009. The firms under scrutiny can pay for as many lawyers as they need to stall between now and Dec. 15, deadline day for the commission’s report.

More daunting still is the inquiry’s duty to reach into high places in the public sector as well as the private. The mystery of exactly what happened as TARP fell into place in the fateful fall of 2008 thickens by the day — especially the behind-closed-door machinations surrounding the government rescue of A.I.G. and its counterparties. Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all.

Next Article in Opinion (2 of 29) » A version of this article appeared in print on January 10, 2010, on page WK10 of the New York edition.

Not sure which terrorists are more threatening.