A Modest Proposal for the SEC
Banks receiving TARP funds should give time to regulators.
Why don't we have Wall Street firms -- especially those receiving TARP funds -- have some of their better people take sabbaticals to go work for the SEC?
It's clear -- abundantly clear -- that regulators are scarcely independent of their regulatees - and the current system, put simply, isn't working too well. I think most of the regulators' employees are probably well intentioned, even if some of them see (or used to see) their jobs as stepping-stones to more lucrative roles in the private sector. I just think they were probably spread too thin, and had inadequate training and support.
Since we're all ultimately in this together, shouldn't we consider a program that would sprinkle more actual experience throughout the pool of regulators?
As part of receiving TARP funds, banks would be required to make some of their better-performing employees available to work for 1 to 2 years at a regulatory agency. The banks would be required to reinstate the employee at a role at least as senior as his or her previous one for at least 1 to 2 years upon re-entry. Wouldn't you think the SEC could benefit from someone who's spent some time at BAC, for instance? (And no, that isn't a recording of the song "Initials" from Hair you hear in the background.)
The person on sabbatical would be reviewed by his or her peers at the regulatory body, and could perhaps be reviewed in part based on the performance of those peers on a challenging examination developed by another bank employee. This person would also review the performance of his or her colleagues at the regulatory agency.
I'm not so naïve as to think there would be no opportunities for cronyism or gaming the system. But there would also be opportunities for peoples' better selves to shine through.
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