Over at Bloomberg today, Jesse Westbrook unpacks at length on how Securities And Exchange Commission Chair Mary Schapiro is having a hard time bringing about "Madoff-Inspired Reforms" to Wall Street.
Schapiro says she's "driving people hard" at the SEC, and pays lip service to "assur[ing] the safekeeping of [investors'] assets." God knows that Schapiro should be uniquely inspired to do something to prevent the Madoffs of the future, seeing as how when she was running FINRA (The Financial Industry Regulatory Authority), she fell down on the job of preventing the Madoffs of the past.
But something seems to be thwarting the effort. Whatever could it be? Westbrook sort of makes it sound as if every time Schapiro encounters a lobbyist, she gags like Superman confronted by Kryptonite:
On Dec. 16, she settled for something less sweeping. Schapiro joined four other commissioners in approving a rule that requires about 1,600 U.S. fund managers to submit to unannounced audits, 83 percent fewer than seven months ago. The revision came after lobbying by fund companies, including executives from T. Rowe Price Group Inc., who met with Schapiro, and Legg Mason Inc., who met with another commissioner, SEC records show.
The diminished inspections rule is one of at least four Schapiro announced as a way to protect investors and boost confidence, then later scaled back or delayed. In August, she bought herself more time on a rule to rein in short-sellers, after lobbying by hedge funds. In October, Schapiro put off plans to give investors more power to decide who sits on corporate boards after the U.S. Chamber of Commerce questioned the SEC's jurisdiction.
Right about now, I think it's worth pointing out that way back in January, the Washington Post's Steven Pearlstein had Schapiro absolutely dead to rights:
For the top SEC job, Obama needed to mount a determined search outside the current establishment -- someone willing to take no prisoners and question everything about the way the industry does business and the way the government regulates it, someone so capable of channeling the outrage the country now feels that he or she would have industry insiders quaking in their hand-made wingtips. Instead, what we got was someone who not only has been at the very center of a failed regulatory process for the past two decades, but has emerged from it well-liked and acceptable to everyone.
You know what's also great about being "well-liked and acceptable to everyone?" You can fail at your job continually and rarely be subjected to criticism in the press!
Of course, it's not just Schapiro who's pliable in the grip of financial sector lobbyists. As Robert Kuttner pointed out here, there's also the president who appointed her:
And of course, her appointment is no accident. There were much tougher, more public minded appointees for SEC chair on the short list, but they were blocked by fierce industry lobbying warning that tough regulators would be divisive or controversial -- which they indeed would, if they did their jobs. Wall Street fundraisers for Obama used their ample access to resist a tough appointee. People in other power centers, like the Treasury and the White House, did not want a tough and independent SEC. If you think the appointment process exists in some kind of platonic post-ideological vacuum, get real.
In his January column on Schapiro, Pearlstein went on to cite the corrupting practices of Wall Street's "good old days," pointing out that "for years, no regulator, including Schapiro, was willing to risk being demonized by the industry, criticized by Congress and overturned by the courts to do what was necessary to stop these practices."
Well, guess what? Nothing's changed.
Wall Street Waits as SEC Fails to Bring Madoff-Inspired Reforms [Bloomberg]
PREVIOUSLY, on the HUFFINGTON POST:
Mary Schapiro: WaPo's Pearlstein Takes On Obama SEC Pick
Robert Kuttner: A Tame Regulator For The SEC