Obama puts a fox in charge of guarding the hen house. (1 Viewer)

Rickboy

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Goldman Exec Named First COO of SEC Enforcement

WASHINGTON (AP) -- A Goldman Sachs executive has been named the first chief operating officer of the Securities and Exchange Commission's enforcement division.

The market watchdog agency said Friday that Adam Storch, vice president in Goldman Sachs' Business Intelligence Group, is assuming the new position of managing executive of the SEC division.

The move came as the SEC has been revamping its enforcement efforts following the agency's failure to uncover Bernard Madoff's massive fraud scheme for nearly two decades despite numerous red flags.

Storch, who will be responsible for project management and operations, will report to SEC Enforcement Director Robert Khuzami.
The rest is here:
http://www.nytimes.com/aponline/2009/10/16/us/politics/AP-US-SEC-Enforcement-Official.html
 

superchuck500

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This is a tricky subject. I think part of the problem with the failure of the regulatory regime was that those in charge didn't really know what was going on. Financials/trades got very complex - and many high level regulatory people admittedly didn't understand derivatives, CDS, and other complicated assets that blew the bubble.

So what do you do if you're Obama? Do you try to find a scrupulous person who is operating in this market and who understands what is going on at the edge of the envelope - but who runs the risk of being, as you say, a fox in the henhouse - or do you install someone from the outside who may be "out of the game" sufficiently as to limit effectiveness?

I don't think it is patently objectionable that the new SEC chief comes from industry. Hopefully, they picked a sharp, scrupulous person who won't be afraid to challenge the industry when necessary.
 

blackadder

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This is a tricky subject. I think part of the problem with the failure of the regulatory regime was that those in charge didn't really know what was going on. Financials/trades got very complex - and many high level regulatory people admittedly didn't understand derivatives, CDS, and other complicated assets that blew the bubble.

So what do you do if you're Obama? Do you try to find a scrupulous person who is operating in this market and who understands what is going on at the edge of the envelope - but who runs the risk of being, as you say, a fox in the henhouse - or do you install someone from the outside who may be "out of the game" sufficiently as to limit effectiveness?

I don't think it is patently objectionable that the new SEC chief comes from industry. Hopefully, they picked a sharp, scrupulous person who won't be afraid to challenge the industry when necessary.
I just think that as the system has shown itself to work, as human nature is, that is unlikely.

The man made his fortune with Goldman, still probabaly associates with Goldman staff. He wants probably to work on Wall Street again when he leaves government.

He won't do that if he acts too much in the people's interest rather than Goldman's interests.

This is the expected outcome given the place we've evolved to with Wall Street and bankers having captured most of the government. Just fuels my cynicism.
 
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superchuck500

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I just think that as the system has shown itself to work, as hujan nature is, that is unlikely.

The man made his fortune with Goldman, still probabaly associates with Goldman staff. He wantsproabably to work on Wall Street again wheen he leaves government.

He won't do that if he acts too much in the people's interest rather than Goldman's interests.

This is the expected outcome given the place we've evolved to with Wall Street and bankers having captured most of the government. Just fuels my cynicism.

I think this view is overly simplistic (though I recognize that it may be a deserved view). But we still have impressive, motivated people in this country who want to do the right thing, and that's what it's going to take to move past this. I don't know enough about this guy specifically, but I just don't buy it that we can't have anyone from Wall Street to be chief of the SEC.

While the risk that he can't be truly objective is a significant risk, I think that for the SEC to be strong, it has to understand where the problems and risks are, and how to adjust them without doing systemic damage to the market. If you staff it with a bunch of career government people or academics, you risk a lack of knowledge of what's happening on the edge of the envelope where arguably regulatory oversight is most needed - and that may lead to impotence for fear of doing damage. You need someone with the understanding and personality to be able to carry some force with the very people that need the oversight. Someone with compelling confidence in his judgment is exactly the kind of person this position needs - and we all know that those people exist in the financial industry. Not everyone there is a leech afraid to shake the tree for fear of exclusion (if that were even possible - bright, innovative financial minds will always have a home on Wall Street, the market will dictate that). To say that he would be afraid to do the right thing for fear of alienating himself is unpersuasive IMO.

It's just a complicated issue. Getting the right person is critical - but I don't think that the entire financial sector is disqualified. It's just not that simple IMO.
 

FullMonte

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I just think that as the system has shown itself to work, as hujan nature is, that is unlikely.

The man made his fortune with Goldman, still probabaly associates with Goldman staff. He wantsproabably to work on Wall Street again wheen he leaves government.

He won't do that if he acts too much in the people's interest rather than Goldman's interests.

This is the expected outcome given the place we've evolved to with Wall Street and bankers having captured most of the government. Just fuels my cynicism.

So, your solution would be to put someone in charge of the SEC who has no experience in big business? Wouldn't that be like appointing an Army Chief of Staff who was never in the army?

Personally, I don't see what the big deal is here. I read the article, and the guy has good credentials, and the article makes no mention of anything he's done wrong.
 

Shawn

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I just think that as the system has shown itself to work, as hujan nature is, that is unlikely.

The man made his fortune with Goldman, still probabaly associates with Goldman staff. He wantsproabably to work on Wall Street again wheen he leaves government.

He won't do that if he acts too much in the people's interest rather than Goldman's interests.

This is the expected outcome given the place we've evolved to with Wall Street and bankers having captured most of the government. Just fuels my cynicism.

You don't need anything to fuel your cynicism. It's now moved well past the point of rationality.
 

blackadder

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You don't need anything to fuel your cynicism. It's now moved well past the point of rationality.
Really?

I think the nationaly naivety is past the point of rationality.

Look, I haven't worked on Wall Street, but I have worked in the bowels of DC. I've seen the stuff of which I rant about up close. I've been to the lunches where the point man who took the revolving door from industry to government is providing privilged access to the decision process to his former colleagues.

Throw out your Civics text book because it's worthless.

I'm prettty sure these record profits for Goldman Sachs in the midst of the "greatest crisis since the Great Depression" are tantamount to insider trading. I mean, Hank Paulson & Neal Kashkari and a host of Goldman alumni and lobbyists were at ground zero for the creation of the TARP and the constantly shifting terms of the bailout.

You really think details didn't flow back to Goldman, their friends and associates, about which assets to buy at which price, which ones would be re-inflated, or at least very strong hints? You think thier decision process didn't factor in how it would effect his kids playmates families?

Whatev.

I mean, you're from Louisiana. Where did the unshakable trust in human nature come from?

http://www.huffingtonpost.com/dylan-ratigan/goldman-sachs-black-magic_b_324095.html

http://www.nytimes.com/2009/10/17/b...ess&adxnnlx=1255798878-nGi9jmzcK4kwnA2lziGxoA
 
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blackadder

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So, your solution would be to put someone in charge of the SEC who has no experience in big business? Wouldn't that be like appointing an Army Chief of Staff who was never in the army?

Personally, I don't see what the big deal is here. I read the article, and the guy has good credentials, and the article makes no mention of anything he's done wrong.
No, to make sure the law regarding conflicts of interest is strengthened and enforced.

If this guy wants to really serve the people then the price of that, in recognitioin of all the past abuses and natural tendencies of humans, should be that he severs all ties to Goldman and can not accept, nor can anyone he is even distanly related to accept, gifts or favors from Goldman or any firm he regulates, ever. Even ten years from now. Surely there is a age old individual who already has enough money and is not looking to use the revolving door?

There are so many possible ways for him to get the payola back indirectly, or directly in the future, that it is very difficult to stop but if you want this to not be abused there should be some pretty draconian laws on the revolving door, or at least enforce the ones that are there now.
 
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dapperdan

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This is a tricky subject. I think part of the problem with the failure of the regulatory regime was that those in charge didn't really know what was going on. Financials/trades got very complex - and many high level regulatory people admittedly didn't understand derivatives, CDS, and other complicated assets that blew the bubble.

So what do you do if you're Obama? Do you try to find a scrupulous person who is operating in this market and who understands what is going on at the edge of the envelope - but who runs the risk of being, as you say, a fox in the henhouse - or do you install someone from the outside who may be "out of the game" sufficiently as to limit effectiveness?

I don't think it is patently objectionable that the new SEC chief comes from industry. Hopefully, they picked a sharp, scrupulous person who won't be afraid to challenge the industry when necessary.

I'll tell you what you do...You put one of the ex-Lehman guys in the position. They understand all the complexities of the business, plus, something tells me they wouldn't turn a blind eye towards any Goldman abuses. The last Goldman Treasury Secretary (Paulson) made the kill shot on Lehman when he got the chance; I have a hunch that there may be some *** for tat that would go on. It might make for an interesting SEC chief. Put a man with some motivation to clean up the abuses, and trust me, an ex-Lehman exec would have no problem investigating Goldman, and imposing any necessary punishments. He's got some personal motivation.
 
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dapperdan

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So, your solution would be to put someone in charge of the SEC who has no experience in big business? Wouldn't that be like appointing an Army Chief of Staff who was never in the army?

Personally, I don't see what the big deal is here. I read the article, and the guy has good credentials, and the article makes no mention of anything he's done wrong.

Now why is it such an extreme strawman that seems to get presented...Either a Goldman guy, or someone with no experience whatsoever...It's not as if the Goldman guy is the only intelligent guy with the necessary experience at understanding derivatives available. Sheesh.

And if you don't like the Lehman idea, although I personally do, go to the Bear Stearns guys that created the derivatives. They've had some time off recently, maybe they wouldn't mind going back to work at some point.
 

VVextreme

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I absolutely hate Obama and think he's doing extreme harm to this country that won't be realized till he's wayyyy out of office... (Like when tax payers start having to pay for his MASSIVE debts, or inflation takes hold due to his massive printing of money, or when his decisions to reduce our military strength end up costing us big time in terms of national security, or one of his many entitlement programs goes bankrupt cause of the inability to pay leaving millions of people in a huge hole, etc, etc, etc.

However I'm fine with this move assuming the Goldman Sachs guy is actually competent, etc. I've never actually met the guy, so just going to assume he has what it takes from a personal standpoint. Since I do not know, then I'll not comment on that part.

But I do wish to comment on the idea of hiring one of the big boys from the industry you wish to regulate and control. You absolutely HAVE to have someone from that industry head up this agency. What are you going to do, hire some fancy smancy professor from an elitist college? You need a guy who knows exactly what is going on in the real world. There is not a better TYPE of person than picking someone from their own ranks. This stuff is so complicated and requires such detailed knowledge of the system, you need a guy who knows how the big boys think. Since Bush and Obama have proclaimed (I think incorrectly) that these guys are too big to fail... they have put the country in a terrible position of removing the threat of failure and must find alternative ways to keep a business honest. I'm convinced all of those guys are just a bunch of scam artists anyways.

However I would pay the execs of this agency a HUGE salary, but then require they can't invest any of it in the markets they regulate and have an impact on. Any previous investments also must be sold off.

The biggest concern is that they go out and try to help their buddies or do favors to enhance their future business opportunities. Someone far smarter than me will have to come up with a good checks and balances system, but at the end of the day, if you hire an intelligent, unethical guy, then you will get hosed. Just no real way around it. All you can do is just pick the best guy for the job and do your best to identify an ethical, knowledgeable person by taking a look throughout his career. History is the best (although still imperfect) indicator. And do everything you can to promote transparency to hope that someone out there will identify the method to their madness before it's too late.

And yes, it's COMPLETELY unacceptable that Madoff was able to operate such a huge scheme of this scale for so long without anyone discovering it. You clearly need someone just as smart and knowledgeable to find those that are creative, ingenious and wishing to use those skills to scam the system. And that's just the most obvious scam. I think all of the risky real estate mortgages, etc that caused our current mess are the most dangerous scams of all, yet no one is going to jail for those... Hm...

Excuse me, I'm going to go kill myself for defending Obama now... Thanks alot!
 
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blackadder

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I absolutely hate Obama and think he's doing extreme harm to this country that won't be realized till he's wayyyy out of office... (Like when tax payers start having to pay for his MASSIVE debts, or inflation takes hold due to his massive printing of money, or when his decisions to reduce our military strength end up costing us big time in terms of national security, or one of his many entitlement programs goes bankrupt cause of the inability to pay leaving millions of people in a huge hole, etc, etc, etc.

However I'm fine with this move assuming the Goldman Sachs guy is actually competent, etc. I've never actually met the guy, so just going to assume he has what it takes from a personal standpoint. Since I do not know, then I'll not comment on that part.

But I do wish to comment on the idea of hiring one of the big boys from the industry you wish to regulate and control. You absolutely HAVE to have someone from that industry head up this agency. What are you going to do, hire some fancy smancy professor from an elitist college? You need a guy who knows exactly what is going on in the real world. There is not a better TYPE of person than picking someone from their own ranks. This stuff is so complicated and requires such detailed knowledge of the system, you need a guy who knows how the big boys think. Since Bush and Obama have proclaimed (I think incorrectly) that these guys are too big to fail... they have put the country in a terrible position of removing the threat of failure and must find alternative ways to keep a business honest. I'm convinced all of those guys are just a bunch of scam artists anyways.

However I would pay the execs of this agency a HUGE salary, but then require they can't invest any of it in the markets they regulate and have an impact on. Any previous investments also must be sold off.

The biggest concern is that they go out and try to help their buddies or do favors to enhance their future business opportunities. Someone far smarter than me will have to come up with a good checks and balances system, but at the end of the day, if you hire an intelligent, unethical guy, then you will get hosed. Just no real way around it. All you can do is just pick the best guy for the job and do your best to identify an ethical, knowledgeable person by taking a look throughout his career. History is the best (although still imperfect) indicator. And do everything you can to promote transparency to hope that someone out there will identify the method to their madness before it's too late.

And yes, it's COMPLETELY unacceptable that Madoff was able to operate such a huge scheme of this scale for so long without anyone discovering it. You clearly need someone just as smart and knowledgeable to find those that are creative, ingenious and wishing to use those skills to scam the system. And that's just the most obvious scam. I think all of the risky real estate mortgages, etc that caused our current mess are the most dangerous scams of all, yet no one is going to jail for those... Hm...

Excuse me, I'm going to go kill myself for defending Obama now... Thanks alot!
"In Goldman We Trust".
 

blackadder

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Haliburton!
Which was also a Grade A load of BS.

But, hey, it's perfectly normal.

We all know the world by the Golden Rule. Goldman and Haliburton have a lor of the Gold, so they make a lot of the rules. And of course they don't make rules they don't like.
 

VVextreme

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"In Goldman We Trust".

I think it's my complete lack of trust that has resulted in my opinion.

With that said, yea Goldman and the other big boy companies are some pretty smart mother frickers... They hire the best and the brightest. They are extremely creative. They know the system like the back of their hand as they are always looking for a loophole to make an extra buck.

Who could possibly know their tricks and the way they think better than one of their own? Police do this ALL of the time when they hire former criminals as consultants. Companies hire former thieves to create new theft deterant devices or test security systems. The federal government recruit former hackers, etc. They also hire former counterfeiters to help improve existing policies and catch others. If done properly and you select the right individual, there is not a more effective way to shut down unethical activity.

Even the smartest people in the world won't be as effective unless they have lived and breathed the subject matter like those they wish to regulate and control. This fact is compounded when you consider that those they wish to investigate are just as smart (if not smarter) than the investigators themselves. Madoff was a genius and had to be very politically + socially aware. Unfortunately he was unethical in his selected use of his talents. For crying out loud, the SEC was tipped off and conducted audits of him several times and STILL came up with nothing. The ONLY thing that stopped Madoff was the economy collapsing and his own confession. That's insane.
 

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