Spitzer as (partial) deregulator

Yesterday I wrote about how NY's Mayor Bloomberg and Sen. Schumer were calling for a lightening of federal regulation. I called this

a classic example of what I have called the "law market" in operation. Courts and regulators (e.g., the U.S. Congress) are finding that they do not have as free a hand as they once thought in a global economy. Firms are mobile, and this activates what I have called "exit-affected" interest groups in the countries they leave (such as the NY financial markets).

A WSJ editorial today says "perhaps [Governor] Spitzer will have a similar epiphany once he discovers how dependent he now is on the state's financial entrepreneurs."

This, of course, would be ironic, since Spitzer has been one of the most aggressive financial regulators, and "he was among the first to denounce last month's report by the Committee on Capital Markets Regulation" which calls for deregulation to address the flight of capital from NY. Indeed, that report calls for restricting the powers of state attorneys general like Spitzer, who have been a big reason for the flight from regulation.

Well, the other shoe has dropped. Today's WSJ also reports that

Mr. Spitzer joined New York City Mayor Michael Bloomberg and Sen. Charles Schumer (D., N.Y.) to roll out a study detailing how New York is losing business to London in part because that market's regulatory climate is perceived as more friendly.* * * He even went as far as to call the SEC the "most important and dominant" securities cop on the beat right now.

But Spitzer is hanging partly off the bandwagon:

The study, however, didn't support making state attorneys general give up jurisdiction in some financial-services cases, an idea that Mr. Spitzer criticized when it was included in the report by the Committee on Capital Markets Regulation. Mr. Spitzer said he made sure the Bloomberg-Schumer recommendations didn't include such a provision.

Surely Spitzer must realize that the same forces of jurisdictional competition that discipline federal regulators also apply to state attorneys general. His attempt to avoid that inexorable logic can only be regarded as disingenuous.

Comments

[Robert Schwartz]

Do the words political hack mean anything to you?

[M.D. Fatwa]

Is there a word for irony so painful it makes your eyebrows bleed?

[Sam E. Antar (former Crazy Eddie CFO & convicted felon)]

As the politician’s care mostly about their relative turfs and their 15 seconds of fame the larger issue of crime prevention is often ignored by those in power. What we have here is a “catch me if you can when you can” scenario which results in big headlines for prosecutors but rarely solves any problems.

We have an accounting profession that is not adequately educated for fraud, internal controls, criminology, and other crucial areas doing battle against white collar felons who do not play by society’s set of rules, do not respect well meaning codes of ethics, and are undeterred by long prison sentences.

So have your codes of ethics, carve out your turfs, pass all your laws, throw the rascals in jail, and ride off into the sunset but the problem of white collar crime will be here tomorrow and for a long time to come.

Sam E. Antar (former Crazy Eddie CFO & convicted felon)