There is, at the very least, a conflict of interest on Glass's part and because of what we know about other people's conflicts of interest, namely, Rubin, H. Paulson, Summers, Gensler, etc., we should all be very wary of having people who believe in the deregulation of derivatives and who support the shadow banking system; and make sure not to put them in positions of power where the welfare of the citizens of the US should be the main concern, not the ginormous wealth of the bankers.
As for the fox being in the henhouse to improve and correct the system, I say: No, No, NO, you misunderstand: the fox is in the henhouse not to guard the interests of the hens; he eats them, destroys them, annihilates them. And that is what the revolving door has done for the financial system of the USA. There should be no appearance of conflict as well as no actual conflict of interest.
Also consider, as one commenter has, that there have been no convictions brought by the SEC against bank executives that caused the financial meltdown. One reason for no criminal convictions could be the conflicts of interest at the SEC.
Revolving Door at S.E.C. Is Hurdle to Crisis Cleanup
By Andrew Ross Sorkin - DealBook
A senior lawyer for the Securities and Exchange Commission recently took center stage in a major case involving a controversial mortgage security sold by Goldman Sachs.
There was just one slight twist in the legal proceedings. The S.E.C. lawyer was not the prosecutor taking the deposition. He was the witness.
This summer, Adam Glass — who joined the agency two years ago and is now co-chief counsel in charge of helping write the rules for the complex financial instruments known as derivatives — testified in a deposition about Goldman’s Abacus, a mortgage investment that the government argues was designed to fail.
It turns out that Mr. Glass has a unique perspective on Wall Street exotica. Before working on the financial crisis cleanup, he helped create the opaque securities that contributed to the mess.
For many years, Mr. Glass served as the outside counsel to Paulson & Company, the giant New York hedge fund firm run by John Paulson, who made billions betting against the housing market. And yes, Mr. Glass, in that role, signed off on Abacus, which was created specifically for the hedge fund to short subprime mortgages. Mr. Paulson handpicked some of the underlying investments in the derivative.
The government, in its complaint, claimed that Goldman had “misstated and omitted key facts regarding” Abacus, including disclosing Mr. Paulson’s role in its creation. The firm paid $550 million to settle the case, without admitting or denying guilt. Mr. Paulson was never accused of any wrongdoing.
Mr. Glass’s recent deposition was for a separate S.E.C. case against Fabrice Tourre, the young Goldman trader who had developed and marketed Abacus to investors. Mr. Tourre, 31, has denied the accusations.
The revelation of Mr. Glass’s involvement in the Abacus deal could undermine the S.E.C.’s case — or at least prove to be a distracting embarrassment.
Perhaps more important, his role once again raises questions about the revolving door between Washington and Wall Street at a time when public distrust about the agency and its lack of enforcement action against the culprits of the crisis is running high.
“There are a lot of talented people out there you could hire who weren’t necessarily part of the problem,” said Mary Kreiner Ramirez, a professor at Washburn University School of Law. “If he was involved in Abacus, how is he supposed to police it?”
It is a common question as the government increasingly looks to fill its ranks with regulatory officials proficient in the language of Wall Street. Robert S. Khuzami, the S.E.C.’s director of enforcement, was previously the general counsel of Deutsche Bank. The agency tapped Eileen Rominger, the former global chief investment officer at Goldman Sachs Asset Management, as its director of investment management.
“The revolving door is such a dominant fact about the S.E.C.’s culture,” said John C. Coffee Jr., a Columbia Law School professor. “You get people who go to Washington for one to three years and then go back to Wall Street.”
Read the entire article here
You can view the video here