In May 1933, J.P. Morgan Jr. was about to testify before the Senate Committee on Banking and Currency to explain how Wall Street had engineered the economic collapse of the nation.
  He was nervous. He would be facing a former prosecutor that Morgan privately called a “dirty little wop”. His name was Ferdinand Pecora.

 “I state without hesitation,” Morgan said at the conclusion of his carefully written opening statement, “that I consider the private banker a national asset and not a national danger.” Pecora had an impeccable sense of timing. He almost immediately asked Morgan a single question: “What is your business or profession?” When Morgan replied, “Private banker,” the audience burst into laughter. His humiliation was only just beginning.

  The great financial reforms of the New Deal didn't just happen by themselves, nor did they happen all at once.
   Even the famous Glass-Steagall legislation, the most comprehensive and effective financial reform in American history, had a much weaker and more pathetic older sibling: the Glass-Steagall Act of 1932.

   Passed in February of 1932, the first Glass-Steagall could only be called "reform" in the broadest sense of the word. The bill sought to address the deflation in the economy by providing liquidity to the major Wall Street banks that were still solvent. The measure was a complete failure.
   Even at this late date in the Great Depression there was still no real efforts by Washington to clean up the sewer that Wall Street had become. For that to happen there had to be sunlight cast on those shadows.

  And so, on March 2, 1932, the Senate passed Resolution 84 to  investigate “practices with respect to the buying and selling and the borrowing and lending” of stocks and securities. This was the start of the famous Pecora Commission.

  But it was a pathetic start.

The committee made little progress, however, during its first 11 months. Banking executives repeatedly denied committee requests for bank records and internal documents. Witnesses easily evaded questions posed by counsel.

 Republican Peter Norbeck, a senator from South Dakota and the chair of the Senate Banking Committee, had proposed an investigation of the very banks he had coddled for years.
   In order to give the commission the appearance of legitimacy Norbeck tried to recruit rising stars in the progressive community, including Harold Ickes (soon to become Roosevelt’s secretary of the interior), Samuel Untermyer (a major figure on the Pujo Committee), and Samuel Seabury. They all turned down the position of special counsel.

 Irving Ben Cooper, a rising lawyer known for his dogged prosecution of fraud, finally accepted the job—but resigned within just a few days, complaining that Senator Norbeck was not giving him enough authority.

 Basically the investigation was a joke and everyone knew it. Meanwhile, all efforts at reforming Wall Street languished.
  In those days the top bankers were practically untouchable and their system was unknowable. For instance, no public examiner had ever set foot inside a J.P. Morgan bank.

So what happened to change this?

  For starters, the Democrats won the November 1932 election in a landslide. The current committee members looking to protect their banking benefactors were now lame-ducks.

   Secondly, the nation had been suffering through waves of bank failures since 1930. Each year was worse than the last. By the start of 1933, most counties in America had no banks left. On February 14, 1933, Michigan declared a state bank holiday. This triggered a final, nationwide, banking system meltdown. By the time FDR was inaugurated, 37 states had suspended their banking operations. When Roosevelt signed his famous Emergency Banking Act there were almost no banks left open to close.
    The complete lack of a working banking system meant there were few resources for the bankers to buy influence in Congress.

  Finally, six weeks before Roosevelt's inauguration, an assistant district attorney for New York County was hired to write the final report for the Senate Committee. His name was Ferdinand Pecora.

 All he wanted, he said, was for Pecora to write a report on what the hearings had uncovered so far. But Pecora, hired Jan. 24, 1933, found that there wasn't anything to write, since the committee hadn't uncovered anything of note. Still, Pecora was intrigued. Hoping for one last stab at getting Wall Street to divulge its secrets, Pecora persuaded the senators to grant him another month of hearings and a fistful of subpoenas.

 Within a matters of weeks, Pecora had become the star of the committee, and the media began calling it the Pecora Committee.

 He had been born in Sicily in 1882, one of seven children of a struggling cobbler. In 1887, the Pecoras moved to New York, where they lived in a cold-water apartment in Chelsea....
   Pecora was a natural litigator—tall, strong-jawed, with bountiful, wavy black hair and a penchant for cigars, which he often brandished to dramatic effect during cross-examinations. He was strikingly energetic and pugnacious (if mostly soft-spoken).

 Pecora first went after National City Bank (now known as Citibank). He effectively exposed a culture of corruption. Within just six days of investigation both the bank's chairman and president resigned under pressure from the press and the government.

  One editor expressed the sentiment of many when he asserted that “the only difference between a bank burglar and a bank president is that one works at night.”

 Pecora exposed how the bank had packaged loans they knew were bad to unsuspecting investors, while betting against those loans.
   But it was his investigation of J.P. Morgan that garnered the most attention. The other senators didn't always appreciate Pecora's methodical, prosecutorial style. One senator took exception at Pecora badgering Morgan about his taxes, but Pecora's style led to the revelation that Morgan, one of the richest men in America, hadn't paid a dime of income tax since 1929.

  More than anyone else, Pecora understood the outrage of the American public. He turned the meetings into exposés of Wall Street's immorality. He highlighted their greed, fraud, and priviledge.

 "Pecora's success was his ability to crystallize the anger that a lot of Americans were feeling toward Wall Street," said Michael Perino, a law professor at St. John's University and author of an upcoming book about the hearings. "He was able to create a clamor for reform."

 In April, FDR asked Pecora to continue investigating for another year. By the time he finished, Congress had passed laws establishing the FDIC and SEC.

 What did it all mean?

   In January 1933 the investigation was almost over, and there was no serious push for reforming Wall Street.
  On June 16, 1933, President Roosevelt signed the true Glass-Steagall Act into law. What happened in those six months was Ferdinand Pecora. He changed everything.

 "His investigation drove these bills and made them stronger than they would otherwise have been," Don Ritchie, an associate historian for the Senate, said. "I don't know any other investigation that produced as much" legislation.

 Today, we are constantly being bombarded with stories about how Wall Street bankers have rigged every market on Earth while defrauding millions (if not everyone) in the process. Yet where is the congressional investigation? Where is the public exposure of fraud and public shaming?
    And what about Dodd-Frank act? The bill that The Economist calls Too big not to fail. The fact is that Dodd-Frank wasn't a reform law. It was a regulation law.
   Unlike Glass-Steagall, which changed the way Wall Street did business in just 37 pages, Dodd-Frank merely tried to regulate the crooked way Wall Street did business in 848 pages (not counting the tens of thousands of pages of regulation that the regulators have yet to write).
   The actual way that Dodd-Frank was to be implimented was left to the already captured regulators, and thus doomed to fail. To emphasize the importance of real reform and not depending on regulators, consider the day that the Securities Exchange Act of 1934 was signed.

 At one point, the president turned to Pecora and asked, "Ferd, now that I have signed this bill and it has become law, what kind of law will it be?"
   "It will be a good or bad bill, Mr. President," Pecora said, "depending upon the men who administer it."