You know the well-worn story of the would-be reformer who comes to office only to discover that “real” reform is “unattainable”; the pragmatic decision in the “world of the possible” is learn to accept a half loaf or less. But here’s a new story. Kara Stein, a new appointee to the Securities and Exchange Commission (SEC) either never received the “world of the possible” memo, or has decided to disregard it.
This editorial from the NYT tells how three big banks recently pleaded guilty to felony charges arising out of their attempts to rig the world currency markets, but in reality came out unscathed because the fines imposed were insignificant to these titans of finance compared to the illegal profits they gleaned from their violation of the law. To make things worse, the SEC refused to impose any meaningful administrative disciplinary punishment. The only encouraging sign was that one commissioner wrote a “scathing” dissent. http://www.nytimes.com/2015/05/23/opinion/banks-as-felons-or-criminality-lite.html?ref=opinion
That commissioner was Kara Stein. This article from Bloomberg gives us some more information about Commissioner Stein. It turns out that she helped write the Dodd-Frank legislation that was designed to prevent large corporations from engaging in anti-social activities like rigging currency markets. When “moderates” on the commission told Stein that the Dodd-Frank legislation did not give the SEC authority to rein in banks in cases like these, she politely told them that was not true. The SEC’s problem was not a lack of legal authority, but a weakness of political will. http://www.bloomberg.com/news/articles/2014-07-21/ghosts-of-2008-haunt-sec-s-outsider-pushing-tough-rules
Kara Stein is the type reformer we need today. She knows her stuff and is faithful to her principles. And to top it off, she’s not only a lawyer, but to my delight also a former law professor, a member the law professoriate, that under-utilized army of potential law reformers. Let’s hope that her scathing dissent is the first step on the road to future victories in the war to rein in corporate power.