So you make big bucks as partner at a top law firm at the “nexus of Washington and Wall Street.”
Your firm’s banking clients cause a massive financial crisis, a “reform” president comes into office, and you get a job in the new administration heading up the criminal division. You don’t prosecute anyone on Wall Street for the financial crisis in your four year tenure. You quit one day after Frontline runs a damning program on you and your administration’s failure to charge–or perhaps even really to investigate–anyone. Two months later you return to your law firm with a $4 million a year gig to specialize “in helping clients navigate corporate crises, anti-corruption matters, money laundering investigations, cybercrime incidents, Congressional investigations, and other criminal and civil matters presenting complex regulatory, political, and public relations risks.”
Well played, Lanny Breuer!
Then there’s the former head of FINRA, Wall Street’s self-regulator.
Your tenure is marked most notably by completely missing mortgage-securities abuses and the Madoff scandal, as well as for Wall Street fines that drop 73 percent in your tenure. The new president asks you to chair his SEC. Your board sends you off with a $9 million pay package for your efforts as leader of its nonprofit. Your SEC tenure follows the biggest Wall Street scandal in history, but yours is four years of wrist-slapping.
You quit and join the board of finance giant GE and then take a highly paid gig with the Promontory Financial Group, an outfit that “puts many former government officials in service to companies they once oversaw,” as MarketWatch puts it–a sort of Revolving Door Inc. for once and future regulators (and the firm most responsible for the fiasco of the so-called Independent Foreclosure Review).
Mary Schapiro, ladies and gentlemen!
As ProPublica’s Jesse Eisinger writes on Twitter: “Future generations will be astonished at how corrupt the American empire became.”
The New York Times reports on Breuer:
The move is his latest turn through Washington’s revolving door, the symbolic portal connecting government service and private practice…
Like Mr. Breuer, Covington operates at the nexus of Washington and Wall Street. It has represented several financial clients facing federal scrutiny, including the New York Stock Exchange, JPMorgan Chase and the former chief executive of IndyMac.
Here’s The Wall Street Journal:
In an interview, Mr. Breuer said he would have no qualms representing a major bank in a criminal investigation, assuming he was able.
“Certainly, if I’m not ethically barred,” he told Law Blog. “I would certainly represent clients and anticipate representing clients in all different sectors, and I think that’s the majesty of our system”…
“I think I have a pretty good sense of what the department and what the government looks for,” Mr. Breuer said.
And, no doubt, what it doesn’t look for.
The Journal gets the quote of the day from Schapiro, who has the gall to tell the paper that, “In my case, there’s no revolving door…I won’t ever be going back to government.”
Here’s American Banker editor in chief Neil Weinberg:
What could be wrong with such behavior? Beyond the cynicism it creates is the risk that regulators and the regulated get way too cozy. Former Federal Deposit Insurance Corp. chairwoman Sheila Bair said this about the influence large banks have over lawmakers:
“The capture, a lot of people say, is bipartisan. And when I say capture, I’m talking about cognitive capture. It’s not so much about corruption. It’s just listening too much to large financial institutions and the people who represent them and not enough to the people out on Main Street who want this fixed.”
When it comes to listening to financial institutions, Mary Schapiro clearly has a world of experience.
You’ll note that tough regulators like Bair, Elizabeth Warren and Neil Barofsky don’t go on to seven-figure gigs financed by Wall Street. It’s worth recalling Matt Stoller’s piece arguing that what matters most for politicians (and regulators) is post-official employment.
Up next for the SEC: Mary Jo White, of Debevoise & Plimpton. Jonathan Weil put it best, as usual: “Obama Picks Morgan Stanley’s Lawyer to Lead SEC.”
We eagerly await word from Tim Geithner and Robert Khuzami on where they have landed.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.