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"Regulators and public officlas who spent years earning little pay and doing public service also want to monetize their experience and finally get a good payche

by alexqgb 12y ago

"Regulators and public officlas who spent years earning little pay and doing public service also want to monetize their experience and finally get a good paycheck after leaving office." Do you really think any company is going to hire an honest, competent ex-regulator who has made a career of fining and frustrating their top executives - and possibly referring them to prosecutors? Or do you think they're more likely to hire that regulator's "friendlier" colleague who spent the same amount of time defusing and deflecting warranted regulatory actions in hopes that he'd be rewarded with a plum gig once he left the government? Assuming they did hire the softie, can you see how they'd want everyone still working for the government what cushy well-paid gig the guy ended up with? And isn't that exactly what happens? "Lots of examples of this in the bitcoin space lately.. e.g. Arthur Leavitt.. it's not just happening at goldman sachs)" Well, yes, my point exactly. "Lots of people doing it means it's okay" is one view. Others would call the same pattern "evidence of entrenched systemic corruption." Indeed, the very fact that this is so widespread that's so problematic as that's what signals to our shadier "regulator" in the previous example that he will, in fact, be suitably rewarded if he plays ball. "In this article, it sounds like a foolish (and possibly illegal) decision by a 29 year old former Fed guy," No, not "possibly illegal". Flagrantly illegal. That's why he's got a criminal defense lawyer.

mariodiana 12y ago
Let me share a little story that I find analogous. In New York City, the Mafia runs the illegal gambling. I don't know if it still goes on, but some years ago I know for a fact that the bookies used to stay friendly with the cops by cashing their paychecks for them. (You see, if you bring your paycheck to the bank, your wife will know how much you make.) One cop I was acquainted with became, when he retired, a small time bookie himself in a suburb of NYC. The small time bookies can't make it on their own, because you need someone to pass the big bets onto, when the action is a little too rich for your blood. Now, do you think the retired-cop-turned-bookie was a ballbuster to the mobsters in New York, or one of the "friendlier" cops? (I think I know what you think. My little story is really in support of your answer to the guy you're responding to. The way I see it, bankers and regulators aren't that much different from mobsters and cops.)
philrapo 12y ago
>Do you really think any company is going to hire an honest, competent ex-regulator who has made a career of fining and frustrating their top executives - and possibly referring them to prosecutors? Yes, absolutely. I think it's ridiculous to suggest that competent and strict regulators are not in demand by the private sector. They clearly have valuable experience, advice, and skills. A timely example is Ben Lawsky, former head of the NY DFS, who is often referred to as one of the "most feared" regulators in banking. I have no doubt he will find himself in demand by the private sector. Another example is Mary Shapiro, former head of the SEC, who now works for Promontory Financial (along with dozens of former regulators) providing consulting services and regulatory advice for the private sector. [1] >Well, yes, my point exactly. "Lots of people doing it means it's okay" is one view. So after one does public service, they should not be allowed to work in the private sector? How is that not okay? I think that people should be free to work whereever they like, provided the do not break laws. There is nothing illegal about taking a profitable position after public service. [1] http://www.promontory.com/Bios.aspx?id=2731 http://www.promontory.com/Bios.aspx?id=2731
- alexqgb 12y ago
  Shapiro's bio is hilarious. "The Hon. Mary Schapiro was chairman of the U.S. Securities and Exchange Commission from 2009 to 2012, capping a distinguished career in government and private-sector regulation. Ms. Schapiro advises companies on corporate governance and compliance standards that meet regulatory and investor expectations." Why is this so funny? Because she was running the SEC when Jed Rakoff, the judge overseeing its settlement with BoA, publicly castigated her agency on the grounds that the deal they brokered (token fine, no admission of wrongdoing) did not "comport with the most elementary notions of justice and morality". So much for "advising companies on corporate governance and compliance standards that meet regulatory and investor expectations." And that was hardly the only bank-friendly failure on her watch. 2009-2012 is timeframe in which, famously, nobody responsible for the global-economy wrecking implosion of securities fraud on Wall St. went to jail. The DoJ said it was because the didn't have the evidence needed to bring anyone to trial. And whose job was it to gather that evidence? That's right, Mary Shapiro's. Usually, when people talk about the toothlessness of "light-touch" regulation and the rank corruption the begets regulatory capture, they cite Shapiro as an example of everything that is wrong with the system. You are literally the first person I've ever encountered who has held her up as an example of something done right. Seriously, this is like getting upset about unjust sentencing laws and using Charles Manson as a case in point. Also, about your boy Ben Lawsky? All of his high profile enforcement actions were foreign banks (Paribas, for example, is French). Hometown banks (GS, JPM, etc.) went largely untouched. I'm sure he'll have no trouble landing a job, but not because he was tough. He was selectively tough. Big difference. >"So after one does public service, they should not be allowed to work in the private sector? How is that not okay?" Dude, spare me the bullshit straw man, okay? That's not even remotely close to what I - or anyone else who has a problem with regulatory capture - has ever said. What people who follow this stuff do say is that high-ranking officials responsible for setting policy or directing law enforcement should not be allowed to accept lucrative jobs from the specific companies or industries they oversaw. Why? Because those jobs are a thinly-veiled vector for outright bribery. At minimum there needs to be a 5-7 year cooling down period before they can go to work for one of their former charges. Others say a decade, at least, if you're serious about maintaining trust in the government.
richardw 12y ago
I know a tax lawyer who worked for the tax authorities and with specific interest in corporate tax avoidance. He loved the challenge of going after companies who were trying to avoid tax. He left to set up his own consulting company and now prints money, for those same companies. I think a rational company would have no problem hiring a competent person who proved they know the business better than the people who currently work for them.
- alexqgb 12y ago
  To the best of my knowledge, the IRS has avoided the specter of regulatory capture simply because there is no single industry big enough to take down an agency with such a broad mandate. Most of the industry-specific loopholes that the IRS does administer are not carved out by the IRS itself. Rather, those are the product of lawmakers making deals in Congress. And of course, the IRS isn't generally telling people what they can and can't do in the marketplace. They're just saying that, regardless of what you do, taxes must be paid. In other words, I suspect your tax lawyer friend is not a very good example of the problem see with captured regulators in the financial industry, where the balance of power between the regulators and the "regulated" is practically inverted.

by alexqgb 12y ago

mariodiana 12y ago

Let me share a little story that I find analogous. In New York City, the Mafia runs the illegal gambling. I don't know if it still goes on, but some years ago I know for a fact that the bookies used to stay friendly with the cops by cashing their paychecks for them. (You see, if you bring your paycheck to the bank, your wife will know how much you make.) One cop I was acquainted with became, when he retired, a small time bookie himself in a suburb of NYC. The small time bookies can't make it on their own, because you need someone to pass the big bets onto, when the action is a little too rich for your blood. Now, do you think the retired-cop-turned-bookie was a ballbuster to the mobsters in New York, or one of the "friendlier" cops? (I think I know what you think. My little story is really in support of your answer to the guy you're responding to. The way I see it, bankers and regulators aren't that much different from mobsters and cops.)

philrapo 12y ago

>Do you really think any company is going to hire an honest, competent ex-regulator who has made a career of fining and frustrating their top executives - and possibly referring them to prosecutors? Yes, absolutely. I think it's ridiculous to suggest that competent and strict regulators are not in demand by the private sector. They clearly have valuable experience, advice, and skills. A timely example is Ben Lawsky, former head of the NY DFS, who is often referred to as one of the "most feared" regulators in banking. I have no doubt he will find himself in demand by the private sector. Another example is Mary Shapiro, former head of the SEC, who now works for Promontory Financial (along with dozens of former regulators) providing consulting services and regulatory advice for the private sector. [1] >Well, yes, my point exactly. "Lots of people doing it means it's okay" is one view. So after one does public service, they should not be allowed to work in the private sector? How is that not okay? I think that people should be free to work whereever they like, provided the do not break laws. There is nothing illegal about taking a profitable position after public service. [1] http://www.promontory.com/Bios.aspx?id=2731 http://www.promontory.com/Bios.aspx?id=2731

alexqgb 12y ago
Shapiro's bio is hilarious. "The Hon. Mary Schapiro was chairman of the U.S. Securities and Exchange Commission from 2009 to 2012, capping a distinguished career in government and private-sector regulation. Ms. Schapiro advises companies on corporate governance and compliance standards that meet regulatory and investor expectations." Why is this so funny? Because she was running the SEC when Jed Rakoff, the judge overseeing its settlement with BoA, publicly castigated her agency on the grounds that the deal they brokered (token fine, no admission of wrongdoing) did not "comport with the most elementary notions of justice and morality". So much for "advising companies on corporate governance and compliance standards that meet regulatory and investor expectations." And that was hardly the only bank-friendly failure on her watch. 2009-2012 is timeframe in which, famously, nobody responsible for the global-economy wrecking implosion of securities fraud on Wall St. went to jail. The DoJ said it was because the didn't have the evidence needed to bring anyone to trial. And whose job was it to gather that evidence? That's right, Mary Shapiro's. Usually, when people talk about the toothlessness of "light-touch" regulation and the rank corruption the begets regulatory capture, they cite Shapiro as an example of everything that is wrong with the system. You are literally the first person I've ever encountered who has held her up as an example of something done right. Seriously, this is like getting upset about unjust sentencing laws and using Charles Manson as a case in point. Also, about your boy Ben Lawsky? All of his high profile enforcement actions were foreign banks (Paribas, for example, is French). Hometown banks (GS, JPM, etc.) went largely untouched. I'm sure he'll have no trouble landing a job, but not because he was tough. He was selectively tough. Big difference. >"So after one does public service, they should not be allowed to work in the private sector? How is that not okay?" Dude, spare me the bullshit straw man, okay? That's not even remotely close to what I - or anyone else who has a problem with regulatory capture - has ever said. What people who follow this stuff do say is that high-ranking officials responsible for setting policy or directing law enforcement should not be allowed to accept lucrative jobs from the specific companies or industries they oversaw. Why? Because those jobs are a thinly-veiled vector for outright bribery. At minimum there needs to be a 5-7 year cooling down period before they can go to work for one of their former charges. Others say a decade, at least, if you're serious about maintaining trust in the government.

richardw 12y ago

I know a tax lawyer who worked for the tax authorities and with specific interest in corporate tax avoidance. He loved the challenge of going after companies who were trying to avoid tax. He left to set up his own consulting company and now prints money, for those same companies. I think a rational company would have no problem hiring a competent person who proved they know the business better than the people who currently work for them.

alexqgb 12y ago
To the best of my knowledge, the IRS has avoided the specter of regulatory capture simply because there is no single industry big enough to take down an agency with such a broad mandate. Most of the industry-specific loopholes that the IRS does administer are not carved out by the IRS itself. Rather, those are the product of lawmakers making deals in Congress. And of course, the IRS isn't generally telling people what they can and can't do in the marketplace. They're just saying that, regardless of what you do, taxes must be paid. In other words, I suspect your tax lawyer friend is not a very good example of the problem see with captured regulators in the financial industry, where the balance of power between the regulators and the "regulated" is practically inverted.