President Trump was elected to office promising he would ‘drain the swamp’ in other words take the U.S. financial power away from Wall Street and the big banks. This he has abjectly failed to do, either by design or failure and, if anything the ‘swamp’ is more powerful than ever, and seemingly becoming more so each day. I used to have a colleague who would sing the praises of the USA as being the least corrupt nation on earth. In response I would tell her it is one of the most corrupt with money buying political favours and overtly influencing political decision-making (the lobbying system), while the regulatory system is dominated by the very bankers and financiers it should be designed to protect the average American from. (Fox and henhouse immediately spring to mind.)
So what is the result? The system is designed to favour the rich and they get richer while the poor, at best, stagnate, with the ‘swamp’ remaining fully in control. Indeed as Clint Siegner notes in the article below, published initially on the Money Metals Exchange website the regulatory bodies no longer even pay lip service to appointing anyone who might be deemed independent, but pack these bodies with ever more of their own.
Swamp Lives On: Crooked Banks and Captured Regulators
By Clint Siegner*
If officials at the Securities and Exchange Commission (SEC) are bothered by allegations of incompetence and capture by Wall Street’s bankers, it is hard to tell. The Commission recently hired Brett Redfearn to serve as Director of the Division of Trading and Markets. Redfearn left a 13 year stint at JP Morgan to assume a key role in regulating banks, investors and traders.
The SEC, and other regulators such as the CFTC and the Federal Reserve, aren’t worried about appearances. Redfearn looks like yet another fox being sent to guard the henhouse. His appointment undermines confidence even if he intends to serve with integrity.
Instilling confidence ought to be a priority at the SEC. The past decade has been a disaster when it comes to the agency’s credibility.
To date, not one high level bank executive, has been prosecuted for misdeeds related to the 2008 Financial Crisis. This despite plenty of the shareholders SEC officials are supposed to be protecting having lost their shirts. SEC bureaucrats either bungled or turned a blind eye to Bernie Madoff’s Ponzi scheme.
To cap it off, a high-profile story which broke in 2010 uncovered agency staff and contractors spending an inordinate amount of time watching pornography on the job.
Office of Inspector General investigators looked at a 5-year period and found 33 people had violated policy by watching X-rated content on federal computers. During these years, Madoff’s con was reaching its peak and Wall Street banks were busily selling mortgage backed securities stuffed with fraudulent loans to pension funds. You would think leadership there might be embarrassed.
Which brings us back to the appointment of Mr. Redfearn. It demonstrates the SEC remains tone deaf at a minimum, and completely captured at worst.
JP Morgan, Redfearn’s former employer, served as Madoff’s banker and has been involved in a number of questionable affairs. Laurence Kotlikoff from Forbes suggested the bank may be “America’s Most Corrupt.”
Until the SEC and its people prove they actually care about keeping the investment banks and financial insiders honest, they should probably do their hiring somewhere besides Wall Street. Otherwise people will understandably assume federal regulators are there to protect powerful firms under their jurisdiction, and not Americans at large.
*About the Author:
Clint Siegner is a Director at Money Metals Exchange, the U.S. precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.