Wall Street regulators completely capitulate

Between North Korean nukes and Trump's tweets, the American public hasn't been watching Wall Street. Like a good pickpocket, the idea is to distract you while they steal everything.
Except in this case, the police are telling you that they are powerless to stop the thieves.

The Commodity Futures Trading Commission has found a solution to its problem of chronic underfunding — it will let the industry do the investigating.
That’s not an overstatement. The head of the CFTC’s enforcement division will lay that framework out in a speech on Monday night, according to a draft received by the New York Times.
The thrust is that companies that self-report will receive a discount on their penalty of about 75%, and in what are called rare cases in the report, relief from penalties altogether.

Because Wall Street is so good at policing themselves.
It's not entirely the fault of the Commodity Futures Trading Commission - they only have a single board member, partly because no one wants to work for Trump.

While the Obama Administration was infamous for settling for fines instead of jail sentences for white-collar crimes, the Trump administration has decided that even imposing fines are too much.

Penalties imposed during the first half of 2017 on Wall Street firms by their regulators — the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and the Financial Industry Regulatory Authority (Finra) — plunged 65% compared to the same period in 2016.
...The Journal explains:
SEC Chairman Jay Clayton, who took over in May, has expressed concern about the size of corporate penalties the SEC has levied in recent years, saying they hurt shareholders and it would be better to punish guilty individuals.

Don't get the idea that this is limited to the CFTC. The regulators, at the direction of the Trump Administration, have taken a hatchet to the already weak Dodd-Frank regulations.
Such as excessive compensation.

Several regulators have dropped pursuit of a long-running plan to restrict bonuses on Wall Street, as part of a wider effort to stop working on unfinished rules put in place after the financial crisis.

And the Volcker Rule.

Wall Street regulators have agreed to rewrite the Volcker Rule, according to three people familiar with the matter, moving to loosen industry-despised restrictions that were central to the U.S. response to the financial crisis.

It just a coincidence that four former Goldman Sachs executives were in top positions in the Trump administration: Gary Cohn, Dina Powell, Steve Bannon, and Steven Mnuchin. The fifth, Anthony Scaramucci, didn’t last long.

Wall Street is still firing whistleblowers who have the audacity to point out their firm's lawbreaking, despite whistleblower protection statutes embedded in Dodd-Frank Wall Street Reform.
What isn't as well known is that firing whistleblowers is a common practice with Wall Street regulators as well.

That Wall Street is unrepentant almost a decade after it caused the greatest financial crash since the Great Depression is a product of toothless regulation and crony regulators. Nothing underscores this point better than what happened to Carmen Segarra, a bank examiner for the Federal Reserve Bank of New York, assigned to monitor Goldman Sachs. After Segarra gave Goldman a negative review, she was bullied inside the Fed to change her review. When she refused, she was fired according to her court filing. But before she was fired, Segarra made a trip to the Spy Store, bought a tiny microphone, and went about taping 46 hours of conversations inside of two of the most powerful Wall Street institutions – Goldman Sachs and the New York Fed.

Why have you not heard about this? Well, the financial news media is as captured as the regulators.
What we've seen instead are ridiculous headlines like these:
“How Washington beat Wall Street”
“Stop Bashing Wall Street. Times Have Changed.”
“Why Democrats Need Wall Street.”

So is all of this a problem? Uh, yes.

None of the regulatory gaps that allowed this to happen have been rectified. The biggest Wall Street banks have grown even bigger and remain too-big-to-fail; Wall Street is still paying the rating agencies for their Triple-A ratings; highly speculative Wall Street firms are still allowed to hold trillions of dollars in taxpayer-backstopped insured deposits in the commercial banks that they are allowed to own under a Byzantine bank-holding company structure with thousands of far-flung subsidiaries around the globe; and a handful of Wall Street banks continue to house trillions of dollars of derivatives inside their insured depository banks – something the public was assured would end under the Dodd-Frank financial reform legislation.
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the SEC revolving door

The Securities and Exchange Commission today announced that Brett Redfearn has been named Director of the agency's Division of Trading and Markets.
The SEC's Division of Trading and Markets establishes and maintains standards for fair, orderly, and efficient markets.
...Mr. Redfearn joins the SEC from J.P. Morgan, where he was Global Head of Market Structure for the Corporate & Investment Bank.

Meanwhile...

Citadel Securities appointed ex-Securities and Exchange Commission official Stephen Luparello as its general counsel, its latest hire plucked from the U.S. stock market’s top regulator.
Luparello, who was previously the SEC’s top official overseeing stock trading
and exchanges, will join billionaire Ken Griffin’s market-making firm in May, according to Citadel Securities spokesman Zia Ahmed.

party on

Of course, over the long term, the consequences of this will be painful. It will tie the fates of high-yield bonds and stocks more closely, given that there's an increasing amount of overlap between the two. And it will create a disproportionate rout in the riskiest debt should there be a reason to sell.

It's fair to say the complacency of 2017 is setting the stage for a more painful downfall at some point. The longer this goes on, the greater the risk builds. But for now, apparently, party on.

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Amanda Matthews's picture

parties this isn’t a surprise.

The only people who have to obey the laws are the plebs. And both parties try to make those laws as hurtful and cruel as they possibly can.

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I'm tired of this back-slapping "Isn't humanity neat?" bullshit. We're a virus with shoes, okay? That's all we are. - Bill Hicks

Politics is the entertainment branch of industry. - Frank Zappa

snoopydawg's picture

Banks write the legislation for congress to pass, they get to pick president's staffs and pretty much run the government.

About Obama letting bank CEOs pay fines instead of prosecuting them, this article shows how the fines were paid.

How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis—With Phony Mortgages!

The name of the article could just as well have been, How the Obama administration screwed home owners while letting bank CEOs continue commit massive fraud and to do untold damage to the home owner's market for decades.

It's too long for me to choose parts of it so I recommend that you read the whole article. IIRC, the good parts are further down.
Jaimie Dimon is being sued by homeowners and Eric Holder is defending him.
Yep. The same Eric Holder that said "that banks are too big to jail."

You just can't make this shit up.

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Which AIPAC/MIC/pharma/bank bought politician are you going to vote for? Don’t be surprised when nothing changes.

@snoopydawg
but it's important to keep track of it.
It's another milestone to show how close we are to the next cliff.

The two driving forces of Wall Street are greed and fraud. When they reach unsustainable levels then it all crashes (again).

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detroitmechworks's picture

And they will NEVER EVER impeach him.

He's far too good at his one job. Distracting the American people.

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I do not pretend I know what I do not know.

@detroitmechworks for the ultimate grift. And bankrupting the US Treasury as well as what money is left from the populace? A feature, not a bug. Fun times for these savages. The ratings are through the roof!

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Only a fool lets someone else tell him who his enemy is. Assata Shakur

The swamp is bigger, steamier, stinkier, more putrid and more filled with greenish-brown slime than ever before.

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Beware the bullshit factories.

If we're speeding, we can pull over and write ourselves a ticket.

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"Religion is what keeps the poor from murdering the rich."--Napoleon

@dkmich

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lotlizard's picture

@gjohnsit  
thanks to Mister “best president since FDR” Hopey Changey.

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divineorder's picture

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A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

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"We'll know our disinformation program is complete when everything the American public believes is false." ---- William Casey, CIA Director, 1981

thanatokephaloides's picture

@on the cusp

Sen. Warren will fix this! s/

Do please remember that the commenters at the Nation aren't as Cynical as we tend to be, amice.....

Wink

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"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar

"All power corrupts absolutely!" -- thanatokephaloides

snoopydawg's picture

@on the cusp

and tells them how naughty they have been.
Go Liz!

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Which AIPAC/MIC/pharma/bank bought politician are you going to vote for? Don’t be surprised when nothing changes.

@snoopydawg Maybe Liz can borrow a "cut it out!" speech from Hill. After all, she doesn't seem to have much use for them anymore.

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Idolizing a politician is like believing the stripper really likes you.

Raggedy Ann's picture

bold behavior to steal everything from us by continuing to play their game and vote for these jokers. We must change our system of government. I'm convinced.

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"The “jumpers” reminded us that one day we will all face only one choice and that is how we will die, not how we will live." Chris Hedges on 9/11

@Raggedy Ann

Exactly, except that this amounts to actively rewarding - and inciting further and ever-worsening - abuse.

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Psychopathy is not a political position, whether labeled 'conservatism', 'centrism' or 'left'.

A tin labeled 'coffee' may be a can of worms or pathology identified by a lack of empathy/willingness to harm others to achieve personal desires.

Raggedy Ann's picture

@Ellen North
which could end with changing the system, which is the goal, so I'm in.

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"The “jumpers” reminded us that one day we will all face only one choice and that is how we will die, not how we will live." Chris Hedges on 9/11

ggersh's picture

but let's all face the fact that our government has
been bought and sold for quite sometime, basically
since the raygun for cosmetic purpose.

WS/DC/CIA don't give a shit about the 320m amerikans
let alone the 7b global citizens.

Empty suit zero said move forward and this is what we get,
it's all treasonous but there ain't no one anywhere raising
a stink outside of maybe rocketman, Iran, and Putin.

All the money given to WS went to many leaders throughout
the world(globalization) to screw the people, profit before
people, but I'll be damned if it isn't god blessing it or
being scared of the boogieman here and there.

until the revolution occurs we will continue to lose everything
yep everything.

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I never knew that the term "Never Again" only pertained to
those born Jewish

"Antisemite used to be someone who didn't like Jews
now it's someone who Jews don't like"

Heard from Margaret Kimberley

SEC Chairman Jay Clayton, who took over in May, has expressed concern about the size of corporate penalties the SEC has levied in recent years, saying they hurt shareholders

Yeah. Shareholders. Those slap on the wrist fines do nothing to change behavior and are just the cost of doing bidness. CEO bonuses, golden parachutes, corruption, what does that do for the shareholders?

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Betty Clermont

k9disc's picture

The same "people" who "captured" our regulators have "captured" the media.

The media AND our politicians are sponsored by the same "people".

Got to get that out there, I think. Rely on some shared guilt by association...

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“Tactics without strategy is the noise before defeat.” ~ Sun Tzu

Lookout's picture

Stacy of the Keiser Report said last week - when we look around Europe (which most Americans can't afford to do), we see countries that were once empires that now supply healthcare, education, living wages, public transportation, etc... Perhaps that bodes well for the collapse of our empire.

Given the nature of our empire, I want it to collapse.

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“Until justice rolls down like water and righteousness like a mighty stream.”

lotlizard's picture

The power players behind silencing Wall Street reformers

To go with the Wall Street on Parade piece from 2014 that you linked to.

And also on the front page at Wall Street on Parade today:

Weinstein company loans: Banks have egg on their face over effusive praise

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