Matt Browner Hamlin reported on Matt Taibbi's stunning Rolling Stone piece here.
The revelations — that the SEC has been destroying evidence of potential crimes if no investigation was contemporaneously undertaken — are shocking. As Taibbi implies, No Cold Case Files for you, Mr. & Ms. Wall Street.
Here's a great, and listenable, interview with Taibbi. Easy on the eyes, if you prefer to hear your information rather than read it.
Talk about captured government. The SEC reminds me of the Gimp in Pulp Fiction: captured, caged, and slavishly compliant.
Did you notice when Taibbi said this practice, of shredding MUIs, started? Early 1990s. Hmm, what happened in the early 90s? Oh that's right; Bill Clinton recaptured the White House after 12 years of Republican rule and installed Wall Street (in the form of Robert Rubin and acolytes) as economy-czar. Looks like someone made someone very happy after the election.
Or as Yves Smith puts it at the excellent Naked Capitalism, re Arthur Levitt, SEC chairman at the time (my emphasis):
[T]he timeline is revealing. It apparently dates to at least 1993, when Clinton appointee Arthur Levitt became chairman. This is well before most people would date Wall Street having much impact on undermining regulation (although if my memory serves me right, a significant first step was the Greenspan Fed abandoning oversight of primary dealers, which took place in 1992). Levitt was from Wall Street, he had been the chairman of the American Stock Exchange. But he has tried to wrap himself in the mantle of being the friend of the small investor and blamed the erosion of the SEC on regular threats by Congressmen like Joe Lieberman, the Senator from Hedgistan, who found this stance to be too much and threatened to cut SEC funding. It isn’t clear if the practice started under Levitt, but Levitt notably was the first SEC chairman for decades who was not an attorney. ...For fun, pair this report with the income inequality segment on PBS. It's the same story, just differently told.
This evidence of an institutionalized effort to change the playing board in favor of the financial services industry puts an entirely different coloration on Levitt’s posture. It now looks like a precursor to the Obama playbook of giving the industry virtually everything it wanted on what counts (Levitt sided with Rubin and Greenspan in opposing regulation of credit default swaps) but engaging in some “friendly to the public” gestures to hide that fact from the Democratic base. And it’s hard to believe now, but in 1993, both the rule of law and propriety carried much more weight than they do now. It’s hard to imagine that those involved were ignorant of the significance of these measures, and the fact that they continued for 20 years before anyone called them out points to a deeply corrupt culture at the SEC.
I’m not easily shocked, but this is shocking. It’s like discovering your a colleague didn’t merely have some problems with his taxes, but was money laundering on behalf of a major drug ring. I hope the Taibbi piece leads to a much broader look into dubious practices at the SEC. But given how the banks seem to own DC, I’m not holding my breath.
GP
