By Mike Allen
House Speaker Nancy Pelosi has ordered a broad, swift investigation of Wall Street and will demand testimony from Bush administration officials and captains of finance, congressional officials said.
House Democrats plan an aggressive look at the administration's role in this weekend's meltdown, and explore further regulation and government structures that would be taken up under the new president.
Republican aides accused Democrats of trying to shift blame with a series of “show trials,” but acknowledged that key officials will wind up cooperating.
The hearings will take place over the next few weeks, the officials said. Treasury Secretary Hank Paulson, who regularly appears on Capitol Hill, will be called to testify as part of the investigation.
As the main event, Rep. Henry Waxman (D-Calif.), chairman of the House oversight committee, wrote to Richard Fuld, chief executive of the imploded Lehman Brothers, to ask him to appear on Capitol Hill on Sept. 25.
“The hearing will examine the regulatory mistakes and financial excesses that led to yesterday's bankruptcy filing by Lehman Brothers,” Waxman wrote. “The Committee will also explore the impacts of the Lehman bankruptcy on financial markets and the United States economy.”
Separately, Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, plans a forward-looking hearing with economists on Wednesday to “begin a conversation about where we go with the capital markets,” a House aide said.
Frank plans “oversight of what happened this weekend with the Treasury and Federal Reserve,” and will look at “how bad the capital markets are, and what may be needed.”
“The markets are not self-correcting,” the aide said. “If they continue to not self-correct over the next several months, is there a federal response? There might be more federal intervention that's needed. We'll proceed cautiously, and that would be next year.'
Both chairmen are acting at the direction of Pelosi, who told them to figure out what happened and show they are on top of the situation, the officials said.
Pelosi said Tuesday on MSNBC that she expects a “restructuring” of the mortgage giants Fannie Mae and Freddie Mac “in the next Congress with a new president.”
“Are they quasi-governmental organizations, are they quasi-non-governmental organizations? Should they just be share hold private institutions?” she said. “We have to examine that. And I've asked the chairman -- Chairman Frank and the Chairman Waxman, the chairman of our Oversight and Reform Committee, to take a look at both of those.”