Wall Street lobbyists are awesome. I’m beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.Read the rest here.
Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.
To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.
Sounds simple, right? But Wall Street couldn’t have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks’ municipal advisory businesses.
Abraham’s Righteousness
3 hours ago
2 comments:
There's no reason to register with the SEC since the MSRB regulates this particular area. Further, taxpayers aren't advisors' clients. The clients are corrupt government officials who are responsible to taxpayers. Rolling Stone hasn't considered the idea of holding government officials to a fiduciary standard.
Redundant and contradictory regulation drives up the industry's costs and decreases competition by driving out weaker players and making entry difficult.
Perhaps those poor rubes in the southern backwood should have studied latin and picked up concepts such as "caveat emptor".
But maybe they did, but like so many given the public trust, enjoyed being wined and dined and had no personal downside in their stupid investments.
Say this for the left - never, ever have they ever found a reason to hold even the smallest government or government employee responsible for anything that ever went wrong.
Post a Comment