If I wrote this in a movie script, the producers would reject it as over the top. The President who said he would stop the revolving door between Wall Street and the executive branch -- the President who poses as the scourge of the big bankers -- hires Goldman Sachs' top asset manager to run the agency regulating asset managers:
The Securities and Exchange Commission today announced that Eileen Rominger has been named its Director of Investment Management. She will begin her work at the agency in February.
The Division of Investment Management protects investors and promotes capital formation through oversight and regulation of the nation’s multi-trillion dollar investment management industry. Ms. Rominger comes to the SEC from the asset management industry, where she worked for the past 11 years at Goldman Sachs Asset Management and most recently served as the firm’s global chief investment officer. She previously worked for 18 years at Oppenheimer Capital, where she was a portfolio manager, managing director, and a member of the Executive Committee.
Does Rominger have to take the ethics pledge about which Obama has bragged so much? If so, how does she plan to do her job and abide by this rule?:
I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.
Aside from dissonance with Obama's rhetoric and his executive order, is this appointment a bad thing? I think so, but Megan McArdle entertains arguments to the contrary:
A source who works in securities law says that for all the fuss this is bound to raise, it might be a good thing:"I would think it has a very good chance of being good for the agency. Anyone with her level of experience should be pretty familiar with the regulatory structure aroung investment management, and her level of direct asset-management experience may well be a very fresh and welcome perspective." After a moment, my source added, rather dryly, "I have seen some examples of the upper levels of the SEC being unwilling to recognize that the world contemplated in certain regulatory requirements does not reflect reality."
McArdle weighs both sides. On one side: "It would be foolhardy to try to regulate without their input--you'd be very liable to do something that sounded good, but turned out to be disastrous." On the other: "the natural result of seeking input and information from regulated entities is what historians and political scientists call 'regulatory capture'--the regulating agency comes to reflect the interests of the people it regulates. (Often, by, say, helpfully erecting barriers that keep out smaller competitors.)"
To my mind, this is an argument against the government ever getting in the business in the first place.