It takes an imminent retirement from the corps of U.S. banking referees to elicit candor like that brought forth from 66 year-old James Kidney, who’s departing his counsel job from the Securities and Exchange Commission.
On March 27, Kidney gave a farewell speech at his retirement party in which he warned that the SEC’s regulatory reach extends far beneath the rarefied air where international bankers and government policymakers collude to serve each other’s interests.
The SEC is now “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Bloomberg quoted Monday from a transcript of Kidney’s speech. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”
The trillion-dollar quote came later, when Kidney further described the SEC as nothing more than “a tollbooth on the bankster turnpike.”
He bolstered his argument by pointing out the SEC’s less-than-robust pursuit of major players allegedly responsible for the 2008 mortgage lending crisis, which yielded exactly no successful criminal prosecution for top industry executives and very few civil charges.
Kidney retired from a long career as an SEC trial attorney last month, but told Bloomberg in a followup interview he hadn’t received any sternly-worded reprimands from his former employer since making the blunt remarks.
Kidney also derided the agency’s self-inflating use of “misleading” numbers to pump up the efficacy of its enforcement efforts, calling the padded stats “a cancer” that “should be changed.”