Audit contributing editor Felix Salmon, writing this morning about Channel 4 reporter Krishnan Guru-Murthy’s tough questioning of Larry Summers, asked, “Has Summers ever been asked questions like this, on camera, by an American reporter?
It seems unlikely. Our interviewers tend to be less Guru-Murthy than Charlie Rose.
Rose has a new interview in Bloomberg BusinessWeek with the SEC’s head of enforcement, Robert Khuzami about the agency’s response to the financial crisis. Rose’s questions actually include one about whether Wall Street “played a big role in creating the financial crisis,” one that he allows Khuzami to dodge:
I don’t mean to duck the question, but at the end of the day we’re not about that. I saw a lot of the commentary back and forth after the case was filed, and folks of different political persuasions seemed to cite the case as evidence of support for their position. But we’re not about who caused it or didn’t. We have a narrower mission: Did they lie to investors in what they told to them about their subprime exposure?
Rose’s question on whether Wall Street banks helped cause the crisis, along with one asking “Why have there been so few suits against Wall Street CEOs?” are thrown out there without pointing out the elephant in the room: Khuzami was a top lawyer at one of the firms that caused the crisis before he came to the SEC.
He was Deutsche Bank’s top U.S. lawyer for five years during the bubble and “oversaw a group of lawyers at his old firm, Deutsche Bank AG, that was closely involved in developing collateralized debt obligations,” as The Wall Street Journal reported in 2010. The Journal also said this:
As part of that job, he worked with lawyers who advised on the CDOs issued by the German bank and how details about them should be disclosed to investors.
CDO production and sales are at the heart of the crisis and Deutsche was one of the biggest issuers of these toxic securities. Now he heads SEC enforcement. Hello?
This giant conflict of interest goes almost unmentioned by the press much of the time but it’s particularly egregious, if totally unsurprising, from Rose here. We in the States need much more of the nondeferential questioning of the powers that be that they get in Britain.
Perhaps BusinessWeek can give Rose’s column to Krishnan Guru-Murthy.
Fraud Without Fraudsters; Fraud Without “Fraud.” The SEC’s settlement with JPMorgan Chase on a Magnetar deal
The SEC’s Khuzami and That Citigroup Settlement: An anonymous letter adds to questions about a wrist slap.