Apr 102013
 

For many of the government officials cashing in, it seems that the more spectacular their failure to serve the public, the more valuable they are to the big Washington players that hire them.

Our government may be a dysfunctional mess, but for the public officials leaving their jobs, it’s been a banner couple of months. Unemployment may be above 9 percent in Washington, D.C., but our top government officials don’t have to spend too much time on the unemployment line.

Take for example, Mary Schapiro, who recently left her post as head of the Securities and Exchange Commission to go to work for a consulting firm named Promontory Financial, which is filled with former bank regulators making big bucks – working for banks!

You may recall Promontory as one of the “consulting” firms that banks got paid a total of $2 billion to do internal investigations of the banks’ foreclosures, in the wake of the robo-signing scandal. They were supposed to find out how widespread the robo-signing – using forged or otherwise fraudulent documents – was.

But the consultants’ investigations were shut down because the investigations themselves were such a mess. I wrote about it here. Basically $2 billion that could have gone to assist troubled homeowners and stabilize the housing market went instead to enrich a bunch of former bank regulators for shoddy work, while helping few of the many Americans who had victims of fraudulent foreclosures. A Senate subcommittee will holding hearing on the flawed foreclosure investigations beginning Thursday in Washington. Will Schapiro be working in the background, helping her new employer avoid accountability?

Schapiro’s tenure at the SEC is notable in the agency’s failure to go after a single high-ranking official at a too big to fail banks for the fraud and recklessness that led to the 2008 financial collapse. In academic circles, this is known by the polite name of “regulatory capture,” which is an overly nice way to describe the sinister legalized corruption that constitutes the status quo in Washington.

We don’t know how much Promontory is planning to pay Schapiro, or exactly what she’ll be doing. Curiously, the firm says she’ll be doing something called “risk management,” which is a strange job for Schapiro, since in her previous positions at the Commodities Futures Trading Commission and the Financial Industry Regulatory Authority, she never saw any risk in the malignant cancerous growth of derivatives investments that made bankers wealthy before they blew up the economy.

While her duties may be nebulous, her new employer was kind enough to leave her time for another part-time job, serving on the board of directors of General Electric, which pays no taxes but compensates its board members about $250,00 year.

Asked about the revolving door aspect of her departure, Schapiro told the Wall Street Journal, “In my case, there’s no revolving door, I’m not going back to government.”

Now don’t you feel better?

Schapiro should fit right in at Promontory, which was founded by Eugene Ludwig, right after his tenure as head of the Office of the Comptroller of the Currency.

As a federal regulator, Ludwig specialized in blocking states from enforcing their own predatory lending laws against big banks on grounds that they were preempted by the OCC. Meanwhile the OCC was way too cozy with the bankers and saw no problems as its charges. In 2000, he left government to found Promontory, which has consistently worked for the too big to fail banks Ludwig once was in charge of regulating.

Earlier this year, one of Ludwig’s remaining colleagues at OCC, Julie Williams, former deputy controller and chief counsel of the OCC, also joined her former boss at Promontory.

Also headed for the exit this month is Lanny Breuer, the head of the Justice Department’s Criminal Division; he co-chaired one of the Obama administration’s faux task forces that boldly promised to get to the bottom of who was responsible for the financial collapse before tiptoeing quietly off into the bureaucratic ether without any resources to do its work. Breuer resigned a day after he was the target of a devastating Frontline documentary that focused on the administration’s failures to hold the big bankers accountable.

Breuer went back to his previous employer, the white-shoe D.C. law firm, Covington & Burling, which represents, you guessed it, the very big banks Breuer and his task force supposed to be investigating. Breuer leaves behind another heavy hitting Covington & Burling alumni – the U.S. attorney general, Eric Holder.

Schapiro and Breuer’s moves are a stark reminder that the real action in Washington is not in the debate between the Republicans and Democrats that we see on television every day, it’s in the never-ending battle, mostly out of public view, by the members of the Money Party to protect their interests against the rest of us, who don’t belong.

 

 

 

About Martin Berg

Martin Berg, WheresOurMoney.org editor, is a veteran journalist.

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