When the federal government quietly releases something in the din of Thanksgiving week, it usually means it’s something bad – something lawmakers are legally required to disclose, but something they really don’t want the public to know about. And when the agency releasing the information is the famously corrupt Securities and Exchange Commission, “bad” is likely too weak a word. In fact, you can almost a guarantee something truly hideous is happening.
This week, as much of America heads home for Thanksgiving, the SEC stealthily inserted a couple ofparagraphs into the federal register. And while the disclosure is shrouded in esoteric language as a way to say “nothing to see here! move along!” there’s plenty to see here – and we shouldn’t move along.
As the Project on Government Oversight reports, the SEC is postponing a new ethics rule. That’s no big deal, right? Wrong.
As POGO notes, the move deliberately allows an untold number of senior SEC employees to evade standard employment regulations – more specifically, it allows them to leave the agency and immediately begin lobbying their old government colleagues on behalf of corporate clients.
To understand why this week’s SEC move is particularly scandalous and ideological – and not just some accident or some move based on earnest logistical considerations — you have to look at the history of the original ethics rule.
Recall that earlier this year, President Obama faced a wave of criticism for nominating Mary Jo White — a woman with a history of turning her government work into private-sector jobs defending Wall Streeters — to head the SEC. White is a perfect exemplar of the corrupt revolving-door culture that has made the SEC into an enabler of corporate crime.
That culture of corruption has lately crescendoed. Indeed, in recent years the SEC has (among other things) engaged in document shredding to cover up the corporate crime it is supposed to be stopping; notoriously persecuted whistleblowers; and been humiliated for trying to prevent its own employees from doing their law-enforcement job. Meanwhile, as was famously noted by U.S. Senator Elizabeth Warren (D-MA) in a video that quickly went viral, the agency has also refused to bring enforcement actions against major financial institutions.
What explains the SEC’s transformation from law enforcement agency to enabler of corporate crime? A lot of it, no doubt, has to do with Wall Street bankrolling presidents and senators of both parties. The money goes into those politicians’ campaigns, and predictably presidents appoint corporate cronies to run the SEC and senators loyally confirm those nominees with few questions. But a lot of it also has to do with ethics rules at the center of the SEC’s new announcement in this week’s federal register. Those rules have permitted a revolving door to spin so fast it is now hard to know who is the SEC cop and who is the corporate robber.
Fast forward to the last few months. Desperate to respond to all the ugly revelations about this corruption and pretend it wants to do something to address the corruption, the Obama administration recently agreed to tighten restrictions on SEC officials leaving the agency. After a POGO report spotlighting weak ethics rules about post-SEC employment, the administration belatedly agreed to recommendations made three years ago by the SEC’s inspector general. Specifically, the administration finally proposed a rule to ban SEC officials from lobbying their former government colleagues for at least a year.
The fact that such a rule was needed only underscored how especially corrupt the SEC is – after all, the rule already applies to all other federal employees, but the SEC had previously carved a waiver out for itself. That said, better late than never – unless the “better” part never comes.
And that’s what today’s announcement threatens to ensure. Delaying the loophole closure until at least next year not only lets today’s SEC officials continue going through the revolving door, it potentiallyindefinitely preserves the ethics loophole – and goes about doing so in an unprecedented way. Yes, the new rule was published as “final” back in October and, as POGO notes, in almost two decades of federal register announcements, “no other Office of Government Ethics notice contain(s) the phrase ‘Withdrawal of Final Rule.’” In other words, this is the first time a “final” rule has been un-finalized.
Translated from government-ese: this was no accident – instead, this looks like a calculated decision by SEC officials to preserve their ability to cash in on their public service in a way other federal officials (thankfully!) cannot. Those SEC officials clearly hoped that between Thanksgiving travel, cooking and gorging, nobody would notice. Nice try.