The New York Times reported yesterday that as whistleblowers cash in on rewards programs set up by financial reform laws, the Obama administration, which “cracked down on corporate fraud” by promoting the programs, is reaping the real payoff. For-profit whistleblower lawyers, flush with their clients’ settlements, are shoveling money into the Obama campaign.
There are a couple of problems with this account of reality in the world of whistleblowing. Most importantly, Obama did not crack down on corporate fraud. Far from it. The Dodd-Frank reform, which set up the whistleblower rewards at the Securities and Exchange Commission (SEC), is so loaded with loopholes that whistleblowers are probably the best and only hope the public has to combat corruption and fraud in banking.
First, Dodd-Frank does not make the obvious reform: break up the Too-Big-To-Fail banks.
Clearly, this needed to happen and did not. Instead we got the Financial Stability Oversight Council (FSOC). Its Chairman is the Secretary of the Treasury (Timothy Geithner – enough said). Although the Treasury Department is happy to answer our questions about this committee and the ways in which it will protect us from future financial cataclysms, its account of itself does not inspire confidence. For example: in answer to your question, “What can the American people expect from the FSOC,” we have this response:
The FSOC can help provide a coordination role among the member agencies to help bring agencies together and to coordinate complex interagency rulemakings, where appropriate. The FSOC released an integrated roadmap following its first meeting that is based on each independent agency’s internal planning processes, which puts into the public domain timeframes statutory deadlines for key deliverables.
I don’t know what this means, do you?
Secondly, Dodd-Frank was supposed to protect us with the Volcker Rule. Here’s what Robert Reich tells us we need to know about that:
But under pressure of Wall Street’s lobbyists, the rule – as officially proposed last week – has morphed into almost 300 pages of regulatory mumbo-jumbo, riddled with exemptions and loopholes.
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