When the Securities and Exchange Commission was formed by President Franklin Roosevelt in 1934, it was in response to the widespread fraud that helped bring on the crash preceding the Great Depression. As chief, he named the notorious Wall Street shark and father of the future president, Joseph P. Kennedy. To critics, FDR said, “set a thief to catch a thief.” By the time Kennedy was done, he said he couldn’t invest in stocks because his rules were so stringent. Whatever else he was, once he had made his millions Kennedy was motivated by a strong commitment to the public good.
Those rules were shredded by the time the Enron era hit at the turn of the century and the SEC did little to go after the grifters who helped bring on the Great Recession. Now comes Mary Jo White, President Obama’s pick to lead the agency. As the federal prosecutor credited with bringing down John Gotti, she might embody a welcome change at the agency. It has much work to do, including investigating flash trading, dark pools and other hustles that are breeding grounds for fraud and hurt the transparency and safety of the markets. Small investors are not even accorded the protection of Goldman Sachs “Muppets.”
Unfortunately, in private practice White also defended the likes of former Bank of America Chief Executive Ken Lewis and former CEO John Mack of Morgan Stanley. The revolving door is still operating. And she can’t bring the rule of law to Wall Street alone. That requires a Treasury Secretary that isn’t Tim Geithner, as well as banking regulators that aren’t captured by the Too Big To Exist Banks. It will require a 21st century Glass-Steagall.
What do you think?
Read on for the best links of the week and the haiku:
This Week’s Links:
Today’s Econ Haiku:
It’s sure as heck not
The Energizer bunny
More like a Li-on