Here's a link to an impressively comprehensive (and very long) disquisition on the insanely dysfunctional way in which laws are made in our country. Or, rather, how they're unmade. Here's a taste. For those with the time and inclination, the entire article is really worth a read.
“The public interest groups get the headline, but if you look at the details, the industry group has actually won. There’s an order of magnitude between the public interest groups’ and the industry groups’ attention to detail.” When I spoke to an industry lobbyist in mid-January, he put that another way. “We can’t kill it, but we can try to keep it from doing any damage,” he said...
...Jeff Connaughton, a lobbyist turned crusader for financial reform, said that the “ubiquitous presence of Wall Street” goes beyond meetings and legalese in comment letters. In his book The Payoff: Why Wall Street Always Wins, he describes the tight-knit relationships between industry lobbyists and proxies and government officials as the “Blob,” which, in his experience, “oozed through the halls of government and immobilized the legislative and regulatory apparatus, thereby preserving the status quo.” Many in the Blob are married to one another and move fluidly from industry to government and back again, he told me. For example, CFTC Commissioner Jill Sommers, who recently announced her resignation, is married to Speaker of the House John Boehner’s top aide...
... Another swinging mace in this stage of the rule-making gauntlet is what Kelleher, the head of Better Markets, calls the “Wall Street Fog Machine.” “They come at you with this jargon,” he said. “They want to make you feel like it’s too complicated for you to understand. You’re stupid, and they’re the only ones who get it—that’s the end game.” This is particularly true when it comes to financial products, like customized swaps, which traders on Wall Street have spent the last decade designing precisely in order to swindle their clients.
“That’s how you make money. You make it so complicated the clients don’t understand what it is they’re buying and selling, or how much risk they’re taking on,” said Alexis Goldstein, who worked in cash equity and equity derivatives on Wall Street for several years, first at Merrill Lynch and then at Deutsche Bank, before joining the reform movement. The more complex the product, the higher the commission you can charge, and the less likely it is that there will be copycats driving down your profit margins with increased competition, she explained. In other words, complexity “isn’t a side effect of the system—it’s how the system was designed.”
It also covers the role of the (conservative) judiciary:
In one section, for instance, the judges ask why the SEC would have dismissed public comments suggesting that proxy access could exact a significant economic cost to corporations. Judge Ginsburg writes, “One commenter, for example, submitted an empirical study showing that ‘when dissident directors win board seats, those firms underperform peers by 19 to 40% over the two years following the proxy contest.’ ” But hold the phone. Or, better yet: WTF? Ginsburg fails to note here that the “one commenter” in question is one of the plaintiffs, the Business Roundtable. And as for that “empirical study”? It was conducted by an economic consulting group hired by that same plaintiff...
...The most profound weapon the Business Roundtable decision introduced into the regulatory gauntlet is stupefying uncertainty. “It has been paralyzing for the agencies,” the former CFTC rule maker told me. How extensive must their cost-benefit analyses be? What kind of costs must be measured? And costs to whom—the industry or the investors? What were the criteria? “It’s like going into a class and not having any idea how your professor grades,” he said. “Everyone is trying to figure out how to move forward without getting sued.”
And, of course, the perversions by politicians:
Lawmakers, and particularly those who voted against Dodd-Frank to begin with, have a number of tools up their sleeves, which they’ve been using consistently since 2010 in an attempt to retroactively weaken the act. One way has been to go after the regulators personally, lambasting them publically, smearing their reputations, and wasting their time. ...
...In the two and a half years since Dodd-Frank passed, lawmakers have introduced dozens of other such bills, so-called “technical amendments,” that purport to change or clarify certain sections of Dodd-Frank but would actually gut, defang, or kill the act entirely. Because the bills are presented as mere tweaks to an existing law, and because industry cash is the only way many of these congressmen will get reelected, the bills are often voted on quickly, sometimes even coming up for a voice vote—a procedure usually reserved for uncontroversial issues...
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Sid, per your concluding comment. There is nothing in our history or history in the world to think that public input will change anything.
ReplyDeleteAs they say, show me the money.