Neurological Correlates

Even though this blog is about neuroscience, here’s another voice, metaphorically holed up in my scrapwood and tarpaper shack, to say that I’m galled by the SEC, Treasury and big bank troika.

This is not about the $3B in bonuses for goals met solely by betting tax payer money — the money used to save the company under threats of extortion — and keeping the profits. (Described elsewhere (see here, for example).)

This is about the appointment of a 29 year old Goldman Sachs employee to the SEC as the COO of the enforcement division.

Is this unbelievably poor judgment?

The one thing, the biggest thing, the one key to getting financial instruments regulated — is the computer/software infrastructure to monitor the industry.  And they hired a 29 year old GS guy to set that up.

The problem with the SEC is agency capture.  Starting your career as a regulator is great to get to know your regulated industry — who will then hire you for the really big paycheck.

Pardon the cynicism, but the oldest trick in the book is to hire an inexperienced or awestruck internal compliance officer where you actually don’t really want any compliance.

The agency is getting ready to regulate dark pools and flash trading (hopefully), both of which involve platforms created by Russian rocket scientists. This is complex stuff.

I certainly don’t mean to diminish  this individual’s skills or character.  But please: don’t you think Goldman will take him out drinking and get him to spill the beans on what kind of infrastructure he’s setting up in order to catch them?  So here’s the hypothetical conversation — making up names except the guy who is headed to the SEC –but this is hypothetical:

Ring ring.

Hi Adam, it’s Nicolai at Goldman– we miss you since you went to the SEC. Do you want to go out and get massively drunk?

After all, Mr. Madeoff married off his niece to an SEC enforcement division lawyer.

It just looks really bad. I wish they would have hired a consulting firm to do the infrastructure, rather than hiring a GS guy who is likely to want a job in industry when he gets done with this.  Isn’t there someone from Kroll or the KGB or someone?

There’s no check or paypal donation, so maybe this is futile.