Now I’m reading SEC Financial Reports because I still have too much free time. Interesting fact: The SEC had a budget of $1.35B in 2014. Not only does this have to pay for protecting investors and maintaining fair, orderly, and efficient markets*, this is also what they have to work with when they bring charges against big banks.
In fact, only $445M of the SEC budget went to enforcement last year. That’s nothing when you consider that Bank of America spent $16.4B on litigation in 2014! JP Morgan Chase spent $2.9B on litigation, but it had another $23B to dip into, on reserve.
Maybe it’s not an apt comparison. I don’t know how much the banks are fighting government agencies versus fighting each other. I do know that government agencies are no match against Wall Street banks.
Matt Taibbi explains how law works on Wall Street [1].
The bank walks into the room with the sordid activity, and the law firm’s partners huddle up and whip their associates – for hundreds and hundreds of billable hours straight, if necessary – until a way is found to call stealing or tax evasion or accounting fraud or whatever legal.
Matt Taibbi proposes the following solution:
That’s the way it should work on the prosecutorial side, too. You should start with a simple moral premise – this group of crooks ripped off X group of victims for fifty million dollars – and then you should bury yourself in law books until you find a way to put them all in jail.
I’d really rather they not do that. Just let me keep my tax dollars, okay. Goldman Sachs didn’t rip me off, nor did they rip off my self-directed retirement accounts, and if IKB bank wants to make a case out of this they can do it on their own time**.
I know, I know, there’s evidence that some public agencies are exposed to bank shit through convoluted investment vehicles but I hope those public agencies at least tried to follow David Swensen’s asset allocation strategy [2] with maybe 0% directed towards toxic securities.
If not, then maybe my tax dollars should go straight to helping these public agencies rather than law enforcement salaries.
*Also, write new regulation for the JOBS Act!
**Although I hope they don’t, because I am a GS shareholder. That’s a disclosure.
References:
1. Goldman Non-Prosecution: AG Eric Holder Has No Balls –RollingStone
2. Swensen, David. Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment, Fully Revised and Updated
3. SEC Annual Reports –sec.gov
See Also:
4. When Regulators Think They’re Prosecutors –wsj
5. Main St. paid for Wall St. maneuvers –LA Times