Just when you thought the Trump cabinet couldn’t possibly get any swampier, the Senate Banking Committee voted yesterday to advance the nomination of corporate lawyer Jay Clayton to lead the Securities and Exchange Commission, the government’s top cop when it comes to policing the financial industry.
Clayton’s former clients, which were mysteriously scrubbed from his bio after he was nominated, include Goldman Sachs, Bear Sterns, Deutsche Bank, UBS, and Barclay’s Capital, along with billionaire hedge fund managers, among many others with Wall Street ties.
Yes, that’s right, a corporate lawyer who spent a career helping companies like Goldman Sachs avoid any accountability for their misconduct is now one step closer to becoming the highest ranking official responsible for enforcing rules and cracking down on Wall Street malfeasance. You don’t need to be a financial expert — or an ethics expert for that matter — to appreciate just how outrageous this is.
In the Trump era, one can become desensitized to the blatantly unethical conflicts of interests that are rife throughout his administration. But this one is shocking even by the appalling standards to which we’ve become accustomed. Matt Taibbi at Rolling Stone correctly observed that Clayton would be “the most financially conflicted SEC chairman in history.” As Senator Warren has pointed out, Clayton’s conflicts of interest are so extensive that he could be barred for two years from actually voting on countless enforcement actions that come before the SEC. For the long list of former clients, Clayton’s mandatory recusal from enforcement actions effectively grants them immunity.
Oh, and did I mention Clayton’s wife works for, you guessed it, Goldman Sachs? (She has said she will leave if he is confirmed.)
I can only assume Trump got the idea to pick Clayton for this role from his Treasury Secretary, Steve Mnuchin, who did some moonlighting as a Hollywood producer when he wasn’t foreclosing on the homes of widows while at the helm of OneWest Bank. Among Mnuchin’s producing credits is last year’s super-hero flop “Suicide Squad,” in which the government enlists the help of the world’s most notorious super-criminals to combat a threat that the normal law enforcement apparatus just can’t handle. It’s a tried and true formula of Hollywood: the bad guys — surprise! — are really the good guys.
There’s just one problem: It only works in the movies. In the real world, putting criminals in charge of policing crime is generally understood to be a terrible idea, one that shows blatant disregard for public safety. Similarly, putting an enabler of Wall Street greed and misconduct in charge of the SEC will cause real harm to millions of working families who already worry that government regulators are too soft on Wall Street and don’t do enough to protect ordinary Americans. (Those fears are not without basis, and for one reminder that these are not “victimless” crimes, see Madoff, Bernie.)
With a Wall Street accomplice at its helm, voters should question whether the SEC can stay true to its mission of protecting investors and ensuring that the financial system is working for ordinary Americans. Or, will it subvert that very mission in the interest of padding the profits of big Wall Street firms. Goldman Sachs share prices have already seen a dramatic hike since Trump began filling the swamp.
Yesterday’s vote was also an important reminder that while stepped up actions by millions of Americans is making a difference in who members of Congress listen to, there is still important work to do when it comes to standing up to Wall Street. Three Democrats on the Banking Committee (Heidi Heitkamp of North Dakota, Mark Warner of Virginia, and Jon Tester of Montana) voted to advance Clayton’s nomination, joining all of the Republican members of the committee (Crapo, Shelby, Corker, Toomey, Heller, Scott, Sasse, Cotton, Rounds, Perdue, Tillis, Kennedy). All of them should be asked why they sided with Wall Street over everyday Americans.
After this week, members of Congress return home for two weeks before Clayton’s nomination will get a vote on the Senate floor. They should use that time to ask their constituents whether someone who spent a career defending Wall Street should become its top enforcer?