As a former Wall Street lawyer, I sometimes am amazed at how unfamiliar people are with the interlocking relationships that exists between large law firms and large financial institutions and regulatory agencies.
To illustrate, Politico has a story about when the agency will finalize a controversial provision of the 2010 Dodd-Frank Act requiring public companies to publish the ratio of the CEO’s compensation to the median pay of employees. It turns out Warren had a meeting with Obama and SEC Chair Mary Jo White where it was agreed that the rule would be completed in October.
So stop for a second, and think about that meeting. At the minimum it does show Warren's power on this issue.
After the meeting White appeared to back off from the commitment to finish the rule, and Warren (rightly) blasted her. White responded saying she hadn't (though a more likely read is she tried to delayed and when Warren raised a stink she decided to keep the original date for the rule.)
But toward the end of the article there is something else, and though it isn't a huge story it says everything about why Wall Street never gets held accountable.
Politico writes:
Warren’s letter also raises issues about White’s leadership that have dogged her before, including reports in The New York Times this year that said White has not participated in certain enforcement cases involving companies that are represented by law firm Cravath, Swaine & Moore, where White’s husband, John, is a partner. That means White, an independent, is unable to cast the deciding vote when the two Democrats and two Republicans on the five-member panel are at a stalemate.
“The impact of a recusal on the operations of the SEC can be quite damaging,” Warren said. She cited an ongoing case involving government contractor Computer Sciences Corp. in which the SEC is investigating the company for alleged accounting fraud.
CSC said in December it had reached an agreement in principle with the SEC to pay $190 million to settle the agency’s allegations. But lawyers familiar with case have told POLITICO that White has recused herself, leaving the final settlement deadlocked between the SEC’s Democrat and Republican commissioners.
So let me explain why this is important. Cravath Swaine and Moore is in many ways the iconic Wall Street law firm. Its client list reads like a who's who of corporate America, and it hires the top students from the top law schools. No, I didn't get past a first interview.
So the head of the SEC is married to a partner at Cravath. What does that tell you about her attitude toward Wall Street? No, she is not her husband, but she damn well benefits from her husband's career. But even more fundamentally, stop and think for a second. If I was worried about a potential SEC enforcement action, I would hire Cravath, which would in turn deadlock the SEC about pursuit of the enforcement action.
Which is outrageous, and foreseeable as hell.
And why Wall Street is never held accountable.
Read more: http://www.politico.com/...
Read more: http://www.politico.com/...