Jake Tapper recently moved from the White House briefing room to CNN, but that doesn’t mean that one of the toughest reporters on that beat has given up his watch on the Obama administration. Yesterday evening, Tapper featured a recent trend among newly-retired regulators and their new lucrative gigs, which raises questions about how enthusiastic they were about performing their previous jobs:
So few of the individuals responsible for the financial crisis have been punished in any way. One reason for the lack of penalties may stem from the fact that those in charge of regulation and enforcement, did not do their jobs with the necessary vigor and aggressiveness.
Today CNN learned the former head of the U.S. Securities and Exchange Commission Mary Schapiro is joining a consulting firm which advises financial firms.
The mission of the S.E.C. is “to protect investors and maintain fair, orderly, and efficient markets.” Schapiro took the helm at the embattled S.E.C. in June 2009. And while many praise her for restoring the reputation of the agency at that time, she has also been criticized for never fully holding Wall Street accountable for the worst misdeeds that caused the financial crisis.
Schapiro’s announcement comes days after Lanny Breuer, the assistant attorney general in charge of the criminal division of the Justice Department, announced he would be leaving the department to rejoin the big bank law firm Covington & Burling as vice chairman, representing a big list of bank clients tied to the financial crisis.
Tapper wasn’t the only one to notice the, er, coincidences. National Journal’s Michael Hirsh calls this the “ultimate dog-bites-man story” today:
As head of the Securities and Exchange Commission for the past four years, Mary Schapiro failed to win a major civil action against any Wall Street executive connected to what may be the worst financial fraud in history, the subprime-mortgage scam that led to the 2008 crash. As head of the Justice Department’s criminal division for the past four years, Lanny Breuer failed to accomplish the same with criminal action. And now both are headed back over to the other side: deep-pocketed firms that earn their keep largely from Wall Street. In Schapiro’s case, that’s Promontory Financial Group, which advises financial firms on regulation; in Breuer’s, it’s Covington & Burling, a major law firm that defends financial clients.
If this sounds like a dog-bites-man story, it is. Actually it’s more like, Wall Street bites everybody. But that too is pretty predictable these days. “It used to be called ‘selling out,’ ‘cashing in,’ or ‘influence peddling.’ Now it’s referred to politely as the ‘revolving door,’ ” said Dennis Kelleher, president of Better Markets, a Washington nonprofit that advocates for better regulation of financial markets. “But whatever it’s called, nothing is more corrosive to the American people’s trust in government than when former senior public officials turn their so-called public service into multimillion-dollar riches unimaginable to almost all Americans.”
In part, I suspect that’s because any real investigation of the 2008 bubble would ultimately point the finger back at policymakers in both parties who deliberately fueled the bubble by pushing Fannie Mae and Freddie Mac into a buying spree of subprime and other bad loans, as well as threats of enforcement of the Community Reinvestment Act on the lending community. That kind of outcome would make it impossible for Barack Obama and his allies to use the FHA to pressure banks into making those kinds of loans again. That would cut off a critical outlet for the kind of social engineering that remains popular with politicians looking for cheap headlines at great cost to the financial stability of the nation.