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AUTHORS ON THE RECORD

 Athugh he was respsbe r sweepg rerm the Uted 

States bakg system, the ame Ferdad Pecra s ukw t

mst Amercas. What made yu decde t te hs stry?

I actually set out to write an entirely dierent book. Te subject

is unimportant, but it tangentially involved the Pecora hearings. I

knew that Pecora had given his oral history in the early 1960s as

part o the Columbia University oral history project, and although I

didn’t think it was going to be terribly relevant to my book, I decided

I should read it. By page 10, I was completely hooked. Pecora had

such an incredible lie story—he immigrated to the United States

rom Sicily in the late 1800s when he was ve years old. He grew 

up in a basement tenement on the west side o Manhattan and

quit school when he was just 15 when his ather was injured in an

industrial accident. Over the next our decades, Pecora supported

his amily, went to night law school, became a prominent New York 

prosecutor, and eventually took on Wall Street in one o the most

successul congressional investigations ever conducted. It really is a

classic American success story. I elt compelled to tell the world about

this unsung legal hero.

i yur ackwedgemets, yu thak Rchard McCuey ad 

 Wam H. Davs, nata Archves sta wh heped yu wth

 yur requests r recrds rm the Seate Bakg ad Currecy 

Cmmttee heargs. Were yu amar wth these recrds

bere yu started research r ths bk? or was ths yur frst 

experece at the nata Archves?

Tis was my rst experience at the Archives, and Richard and Bill

 were enormously helpul. Although I spent many days there, I still

eel that I only scratched the surace o what is available in these

records. Tere are, I believe, over 170 boxes o documents at the

National Archives rom the investigation. It is a treasure trove or

anyone interested in the inner workings o the nancial industry 

during the 1920s and 1930s.

Ferdad Pecra was a exceet awyer, but t a Wa Street 

expert. Yu are a pressr aw at St. Jh’s Uversty whse

area expertse s securtes reguat ad securtes raud.

Hw d yu thk Pecra ared terms uderstadg the

cmpcated ssues securtes?

Pecora didn’t know much about Wall Street, which made his

perormance in the hearings all the more remarkable. He was a quick 

study, with a phenomenal memory. One o his aides said that the sta 

“looked with astonishment at this man who, through the intricate

mazes o banking syndicates, market deals, chicanery o all sorts, in a

eld new to him, never orgot a name, never made an error in a gure,

and never lost his temper.”O course, Pecora was ar rom inallible. His ignorance about the

ner details o Wall Street practice occasionally led him astray. A ew 

times, he was fat-out wrong.

But given the quick pace o the investigation, it’s actually 

surprising how accurate he was. In the end, I don’t think his ew 

missteps mattered very much. Pecora tried not to get lost in the

arcane details. He had spent a dozen years as a prosecutor in New 

 York, and he knew that the way to win over a jury was not to dwell

the hellhound of

wall streetby hilary parkinson

   M   i  c   h  a  e   l   P  e  r   i  n  o

In 1933, the United States was gripped by the Great Depression. Te country’s nancial system teetered

on the verge o collapse. Tirty-eight states had closed their banks, and one in our amilies had lost their

lie savings.

Reorm was needed, and it would begin with Ferdinand Pecora, who investigated the causes o the 1929

crash in his role as chie counsel or the Senate Committee on Banking and Currency.

For 10 days, the ocers o National City Bank were grilled by Pecora. And 10 days later, Charles E.

Mitchell—chairman o that bank and ormer adviser to three Presidents—resigned in disgrace. Ultimately,

the results o the investigation would lead to stronger ederal oversight on the activities o banks and the

stock market.

Michael Perino is the Dean George W. Matheson Proessor o Law at St. John’s University School o 

Law in New York. He is also a ormer Wall Street litigator. He has testied in both the United States Senate

and the House o Representatives and has written extensively on regulation, securities raud, and class

action litigation. His website is www.michaelperino.com.

62 Prologue Fall 2011

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Authors on the Record

on the minutiae. His jury was the American public, and I think he

knew that presenting endless testimony about the ins and outs o 

 Wall Street would be counter-productive. I he really wanted public

support or reorm, he had to tell them a story that was easy to

understand. Pecora was the master o the telling anecdote—he was

able to spin compelling narratives out o the most conusing welter

o complex details. Tat was how he created the clamor or reorm.

His genius was his ability to convert complex economic problemsinto simple morality plays.

Te heargs take pace at the very ed the Hver admstrat,

days bere the augurat  

Rsevet. Te utgg ad cmg 

Presdets were ctact wth each

ther. Were yu abe t expre the

archves at bth Presdeta brares?

I spent a good deal o time at the

Roosevelt Library in Hyde Park, and I

did research in a number o other archival

collections as well. I did not make it outto the Hoover Library, but ortunately I

 was able to rely on previously compiled

primary documents rom the Hoover

administration and the rich body o 

secondary material that has been written

about the interregnum.

 Athugh the baks were ther death

thres durg the 10 days heargs,

Rsevet remas a backgrud fgure

ut hs augurat. Hs cus

seems t be creatg a auguraspeech that w mtvate ad cmrt 

  Amercas whe addressg the

faca dsaster. Dd yur tme at the

Rsevet lbrary shed ay ew ght 

Rsevet’s mtvats?

  When President Obama took oice in the wake o the 2008

inancial crisis, his then chie o sta, Rahm Emanuel, said that

politicians should never let a good crisis go to waste. Roosevelt

understood that maxim perhaps better than anyone else. When

Roosevelt took oice in March 1933, there was not a single

ederal law that regulated how Wall Street operated. he

 wrongdoing Pecora uncovered and the desperate condition o the

country gave Roosevelt the political climate he needed to change

that. he irst ederal securities laws, ederal deposit insurance

(a reorm Roosevelt initially opposed), and the creation o the

Securities and Exchange Commission all low rom the abuses

Pecora uncovered.

Roosevelt’s motivation to capitalize on the crisis is well known.

  What surprised me was Roosevelt’s close personal connection

to the scandal. My book ocuses on the ew weeks ater Pecora’s

appointment as committee counsel in the winter o 1933. Te

investigation had started the previous March and had largely been

ineective. But Pecora turned it all around when he subpoenaed one

o the leading bankers o the day, Charles E. Mitchell, the chairman

o the National City Bank o New York (today’s Citigroup). Over

the course o just 10 days, Pecora showed that the bank and its

securities trading arm had engaged in all sorts o unsavory behavior.It sold worthless bonds to investors without ully disclosing the risks,

manipulated its stock price and the stock prices o other companies,

and lavishly compensated its executives as the country plunged into

depression.

It all hit close to home or Roosevelt

because he had a long personal banking

relationship with City Bank. Tere was

one Roosevelt quote that really stood

out or me. Shortly ater he took oce,

Roosevelt told a visitor rom another Wall

Street rm: “My gosh, I eel Charlie took 

my money.”

  Aye readg ths bk ca’t hep

but wder why hstry seems t be

repeatg tse recety whe t cmes

t baks ad vestmet frms. Ater

researchg ad wrtg ths bk, d

 yu thk the Seate w be kg r

ather Hehud?

I think there have already been some

attempts to recreate the success o the

Pecora hearings. Senator Carl Levin

held hearings in the spring o 2010 onGoldman Sachs and released a scathing

report on the investigation earlier this

year. Congress created the Financial Crisis

Inquiry Commission to investigate the

causes o the nancial crisis, although that independent commission

 was more closely modeled on the 9/11 Commission than the Pecora

investigation.

he more relevant question, I think, is why these eorts did

not have the same success. Pecora was a gited courtroom lawyer,

and he certainly deserves the lion’s share o the credit. But he

  was also the beneiciary o impeccable timing. He decided to

put the leader o the largest bank in the country on the stand

in Washington at the peak o the banking crisis o 1933. It was

the Washington equivalent o the perect storm—the precise

combination o crisis and scandal necessary to pass major reorm

legislation. hose political moments, however, are ephemeral. As

the 2008 inancial crisis slips arther and arther into the past, it

looks increasingly likely that we have missed our opportunity or

meaningul reorm.

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