So much for new Securities and Exchange Commission Chair Mary Jo White's plan to set up a panel of experts to advise her agency on the ins and outs of the arcane schemes of the financial industry. Members of the advisory market-structure committee were to be picked by each of the five commissioners -- two Democrats, two Republicans, and independent Commission Chair White.
A Republican objection has kept what could have been the most effective member nominated for the advisory board from being named to it:
Nobel Laureate Stiglitz Blocked From SEC Panel After Faulting High-Speed Traders
Joseph Stiglitz, the Nobel laureate economist who called for a tax on high-frequency trading, has been blocked from a government panel that will advise regulators on issues facing U.S. equity markets, according to people familiar with the matter....
Republican Commissioner Daniel Gallagher opposed Stiglitz’s nomination in recent weeks as White sought to complete the list of participants, according to two people who asked to not be identified because the deliberations were private. Democratic Commissioner Luis Aguilar had pushed for Stiglitz, who has said high-frequency trading isn’t good for financial markets and should be curbed, possibly through a tax.
“I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry,” Stiglitz said in a phone interview....
While the idea of an expert advisory board is an excellent one, how Obama appointee White chose to select the members for it was bound to prevent any real input that might be unpleasing to the financial industry.
The fact that only two of the five commissioners doing the nominating are Democrats, and then that all five commissioners have to agree on the final list of 15 nominees ensures that no objectionably progressive voices will have to be heard by the commission in their work of regulating the financial markets.
“Financial markets are important and I have been worried about the way they have been working and whether they are serving the American economy,” Stiglitz said. “I was willing to serve. The next thing I knew, I was told you didn’t get it.”
Aguilar confirmed that he recommended Stiglitz but declined to talk about the panel’s membership. “I thought he would do a fantastic job as a Nobel-winning economist and someone who is well-informed about how the market structure works,” Aguilar said.
A former chief economist of the World Bank, Stiglitz argued in an April speech that high-frequency trading can make markets less efficient while driving other investors to cloak their orders by placing them away from exchanges using dark pools, leading to less transparency.
A shame, and a waste of rare expertise. I guess he'll just have to keep working for change from the outside like all the rest of us.
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