“A tollbooth on the bankster turnpike”

A retiring SEC attorney criticizes the Securities and Exchange Commission:

James Kidney, who joined the SEC in 1986 and retired this month, offered the critique in a speech at his goodbye party. His remarks hit home with many in the crowd of SEC lawyers and alumni thanks to a part of his resume not publicly known: He had campaigned internally to bring charges against more executives in the agency’s 2010 case against Goldman Sachs Group Inc. (GS)

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”

This doesn’t tell us anything we didn’t know, but it confirms everything we suspected. Government regulation simply Does Not Work. It is easily coopted and corrupted, most particularly in industries where large quantities of money are involved.

Fines simply do not work when penalizing corporations. They just pass on the costs to their customers, or in the case of banks, create more money out of thin air. And it’s too easy to place the blame on employees who no longer work there.