If Barofsky heads the SEC I’ll work for it
We discussed the credit crisis, the recent outrageous HSBC ruling which quantified the cost banks near for money laundering for terrorists and drug lords at below cost, and the hopelessness, or on a good day the hope, of having a financial and regulatory system that will eventually work.
We discussed the incentives in the HAMP set-up, which explain why very few homeowners have actually received lasting relief from unaffordable mortgages. We discussed the incentives for fraud and other criminal behavior in the absence of real punishment, that too much money is being spent pursuing insider training because that’s what people understand how to do, and we discussed the reluctance of the regulators to litigate tough cases. We talked about how change has to come from the top, because all of these organizations are super hierarchical and require political will to get things done.
In the past year I was offered a job at the SEC, working as a quant in the enforcement division. Although I want to help sort out this mess, I haven’t felt that this job, which is relatively junior, would allow me to do that meaningfully.
But I came away from the meeting with Barofsky with this feeling: if we had someone in charge at the SEC like him who could speak truth to power and who is smart enough to see through economic jargon and bullshit well enough to understand incentives for fraud and lying, then I’d work there in a heartbeat.
Let’s just hope it doesn’t take another world-wide financial crisis before we get someone like that.