“Franklin Delano Roosevelt established the SEC in 1934 and, to the surprise of many, appointed Joseph Kennedy—a reputed bootlegger and stock speculator—to be its first chairman. On that day, the revolving door began to spin. Asked why he would appoint someone many considered to be a crook to head the SEC as its first chairman, FDR is said to have replied: ‘It takes one to catch one.’ So began the debate about the revolving door.”
Great cartoon from Matt Wuerker at POLITICO about POGO’s recent report on the revolving door at the SEC.
A study of thousands of government records shows a pervasive culture at the Securities and Exchange Commission (SEC), the government’s top financial regulatory agency, of former SEC employees leaving the agency to go work at major banks. Former SEC employees have helped major firms secure exceptions from federal law, fight allegations of wrongdoing, and soften the blow of enforcement actions.
“The revolving door between the SEC and the firms it oversees is so pervasive that it threatens the integrity of our regulatory system,” said Michael Smallberg, the author of POGO’s new report.
“If you get caught with your hand in the till you go to jail, but if you’re a big bank and you’re caught breaking the law it seems that all that happens is you’re fined and told you’ll go to jail if you do it again.”
But a year after a federal grand jury issued subpoenas and regulators vowed reforms, the largest bankruptcy since the financial crisis has begun to fade from Wall Street’s memory.
Federal authorities have all but cleared MF Global’s top executives of criminal wrongdoing, people briefed on the matter say. The government has yet to usher in a wider overhaul of futures trading rules, save for certain piecemeal policy changes. And the profit-making exchanges that rely on brokerage firms for business still police the futures industry, presenting potential conflicts of interest.”
The man who created one of the country’s biggest banks is now arguing that too big to fail banks should be split up.