Thursday, March 17, 2016

Avoiding Scrutiny & Accountability

Recent stories showed the Obama administrations letting insiders and corporations off the hook.  The first dealt with the Department of "Just Us":  Fortune reported:

In late 2010, in the waning months of the Financial Crisis Inquiry Commission, the panel responsible for determining who and what caused the financial meltdown that lead to the worst recession in decades voted to refer Robert Rubin to the Department of Justice for investigation. The panel stated it believed Rubin, a former U.S. Treasury Secretary who has held top roles at Goldman Sachs and later Citigroup “may have violated the laws of the United States in relation to the financial crisis.” Rubin, the commission alleged, along with some other members of Citi’s top management, may have been “culpable” for misleading Citi’s investors and the market by hiding the extent of the bank’s subprime exposure, stating at one point that it was 76% lower than what it actually was.

No government action was ever brought against Rubin. And there is no evidence that Department of Justice acted on the crisis commission’s recommendations.
The Obama administration knows how to hide the extent of a disaster, financial or natural.  OMB Chief Peter Orszag, who later landed an executive position with Citigroup, minimized the extent of the BP Oil Spew in the Gulf of Mexico.

Obama's IRS took more of a hand's off approach with corporate auditing:

Large U.S. corporations had a good tax-filing season in 2015. Firms with at least $10 million in assets faced the lowest IRS audit rates in at least a decade as the tax agency coped with staffing declines, new data show.
Another way to avoid scrutiny and accountability is to coopt the regulator or better yet, self regulation.

Wall Street’s top lobbying group wants a closer relationship with the policy makers that oversee its member firms. 

John Rogers, chairman of the Securities Industry and Financial Markets Association and a top official at Goldman Sachs Group Inc., on Tuesday called for a standing body made up of bankers and regulators to discuss developments in policy, examination and enforcement. A key responsibility for the panel would also involve regularly providing guidance on postcrisis rules and other issues to financial firms.
Even those caught red handed only pay a temporary price, as evidenced by the SEC's approving Steven Rattner's fee income deal with Guggenheim.  Bloomberg reported:

The former head of Quadrangle Group, Rattner has faced limits on his financial activities after the 2010 resolution of an SEC probe into kickbacks in connection with a New York state pension fund.

President Obama should be rewarded handsomely for his administration's service to the insider class.