Former SEC Chair Schapiro Reportedly Joining Consulting Firm; Another Former Regulator Cashes In On Contacts In A Subtle, Legal Form Of Corruption

Tuesday, April 02, 2013 07:35
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Former SEC Chair Schapiro Reportedly Joining Consulting Firm; Another Former Regulator Cashes In On Contacts In A Subtle, Legal Form Of Corruption

Tags: regulation | sec

With the news today that former Securities and Exchange Commission Chair Mary Schapiro is taking a job at Promontory Financial Group, another powerful former regulator is headed to a lobbying and consulting firm to help thwart regulation of the people she used to prosecute. While you might have thought that the near-collapse of the financial system four years ago, which was largely due to regulatory failure by the SEC, would have brought about reforms to prevent such inlfuence peddling to continue, you would have been wrong. 

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"In my case, there's no revolving door…I won't ever be going back to government," the 57-year-old Ms. Schapiro said in an interview with The Wall Street Journal, which broke the news.. She decided that after spending "28 of the last 32 years as a regulator," now was the "right time…to do something different," WSJ reported.

 

The risk-management, regulatory and compliance consulting firm says that Schapiro will serve as a managing director and chairman of its governance and markets practice, according to The Washington Post.

 

Federal regulation of everything from autos to securities is corrupted by former regulators who switch sides, and Schapiro's new position is a continuation of that decades-old tradition. While it is accepted in Washington as business as usual, it quietly corrupts American government.

 

Promontory represents Wall Street. Since Schaipro only left the SEC four months ago, she knows how the agency works and its most infliuential players. She will be an effective consultant but there ought to be a law preventing former regulators to play the angles the outside world does not know even exists in order to help the people they once regulated escape, minimize and evade effective government regulation.

Comments (2)

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JakePlanner
Great job Andy in pointing out the number one problem in the financial services industry - no regulation for the heroin junkie investment banking industry. (Not my term, Charlie Munger's term.) We must come up with a new way to pay our regulators, and prevent them from leaving government.
JakePlanner , May 03, 2013
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agluck
You can't prevent people from leaving government. But you can prohibit today's top regulators from working for a securities regulation firm for at least three years after leaving the government.

Reform like this has been talked about for generations.

I'm not saying Schapiro is corrupt, but the securities regulation business fosters a bad outcome by ultimately allowing government service to be a ticket to a financial windfall from Wall Street.

Almost overnight, today's government insiders are repeatedly transformed into Wall Street lobbyists. The system breeds cronyism among Wall Street executives and government regulators.

It's cronyism and it's bad for businesses and government.
agluck , May 04, 2013

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