The Board, The Cftc, And The Sec Each Have Responsibilities In: Fill & Download for Free

I can't speak to several of the examples cited of "regulatory capture".But I can address a few of them, specifically the SEC, the OCC, the New York Fed, the CFTC and the FCC. Each of the examples cited are either a form of cherry-picking, selectively choosing incidents or quoting journalists with a particular political agenda, and/or suggest a misunderstanding of what the agency's mandate and capabilities might actually be.The New York Fed, for instance, isn't even a regulatory agency; it's a bank, and a federal instrumentality. The Board of Governors of the Federal Reserve, on the other hand, is a federal agency. There's a significant difference. The Federal Reserve System is complicated, and terms like "regulatory capture" should be applied carefully, and with better rationale than what the Wikipedia article provides.That said, there's no question but that "when a regulatory agency (wikipedia.org), created to act in the public interest, instead advances the commercial or special concerns of interest groups (wikipedia.org) that dominate the industry or sector it is charged with regulating", the result might well be a limited and weak regulatory effort, allowing the industry being regulated more discretion in setting prices or product manufacturing or required disclosures and labeling than the general public might have expected. Sometimes this result can occur not through regulatory capture, but through a lack of agency funding through Congress and insincere support, lack of industry cooperation, or a poorly written law that eviscerates the spirit of the legislation by leaving out sufficient enforcement ability and/or complicates the letter of the law by obfuscating its intent with technical, incomplete, and byzantine language that takes the courts, industry, and regulators years to parse and try to interpret.It's a bit of a conundrum: where do you go to find people outside the industry who know all the tricks, bells, and whistles, and where the bodies are buried inside the industry? And, are regulatory agencies really created "to act in the public interest" or do they have narrowly defined, selected-by-Congress mandates? Aren't the industries regulated and their workers part of the public, too?Setting aside, for now, the question of whether or not a government regulatory agency is truly in the public interest or not at all anyway (your answer might depend on your belief in the power of market forces and your politics), there are still a number of things one can do to review and reduce the risk of unseemly regulatory capture:1. Restructure the agency and reconsider its mandate. For instance, the Securities and Exchange Commission (How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation (Securities and Exchange Commission)) is primarily responsible for the promulgation, administrative interpretation and enforcement of the eight laws (and accompanying rules and interpretations) enumerated here: The Laws That Govern the Securities Industry. When I started in the financial industry in the late 80's and early 90's, there were only five laws; and the only two that really, really mattered (unless you were a mutual fund manager/accountant or a bond indenture trustee) were the Securities Act of 1933 and the Securities Exchange Act of 1934. Over the past decade or so, the SEC's reputation in the markets diminshed significantly, and it seemed to have lost its way. At the same time, the industry it regulated grew increasingly powerful and sophisticated. In 2009 the SEC added a division: "Risk, Strategy and Financial Innovation" in an effort, in my opinion, to try to catch up with what had happened in the markets while it was sleeping. I don't think this will be enough, but at least it's a start.2. Reconsider who is hired, why, and for how much. When the SEC was formed in the aftermath of the Great Depression, FDR tapped Joseph Kennedy, President Kennedy's father and an extremely successful investor (and rumored bootlegger) to head it and clean up the securities industry. According to legend, "somebody asked FDR why he had tapped such a crook. "Takes one to catch one," replied Roosevelt." (http://en.Wikipedia/wiki/Joseph_P._Kennedy,_Sr.) It's extremely difficult to understand the culture of an industry sufficiently to monitor it if you haven't been in it; still, you can get too close if you have to wholly rely on that industry for education and information as to how it works. A good balance between independence and intimacy is extremely difficult, if not impossible, to strike.One of the problems traditionally (and especially) with the financial regulatory agencies is recruiting and hiring talent; when industry newbies are being compensated at 10 times or more than experienced examiners, it's a challenge to create a relationship with the examinee where the examiner will be respected and not summarily dismissed, or where examiners with the talent and knowledge to call out the problems would be interested in working for the government v. private industry, at all. Overall, the incentives for working in government are very, very different than those in private industry and attract a different type of worker. For instance, at least one agency has a 9-day workweek (I think it's called 40-10 or something) - i.e. every other Friday is off. Many government employees I've spoken with are in it for the pension and health benefits; they can talk at length (really - unbelievable length, especially if they are approaching a milestone work anniversary) about all the various permutations of working an extra year or not to boost their payout. People who take a job for the benefits are a very different breed from those who take it for the adrenaline rush, the power, and the bonus.At the highest levels where policy is approved and Congress is coaxed, political appointments rule. Not all political appointees are good managers; nor do they necessarily understand implementation. Without a solid team in place behind them, they're stuck with the legacy of their predecessor absent a significant event that moves major new legislation, and it can take years to change things and shift personnel. Often they can try their best to turn the big boat, but are hamstrung by inherited, outside-their-control budget and legal battles which dramatically limit their operational flexibility and efficiency.Further, a very closed and defensive culture can develop within an agency where those inside the system try to keep innovation and change out, because they fear it. I was at a point in my career where I applied to an agency for a job; I was interested in the challenge and perspective shift. Despite the fact that I had had 10+ very successful years in finance at that point and knew a lot about the business, one of the interviewers, a senior manager in the office I would have worked out of, asked me what my law school GPA was. Since I couldn't remember and didn't care, and since I hadn't gone to what he considered to be a top 10 law school, I was summarily dismissed and didn't get the offer. Being an attorney had little to do with the role I would've had at that agency. I've always felt he was just bitter and pissed because I made more money than he did - and he probably worked harder for it, too, with fewer kudos.3. Rewrite the laws that establish those agencies. They suck. They're too long, unclear, inconsistent, frustrating and difficult to implement; even when looking at enabling legislation or commentary, they lack meaningful, implementable purpose, direction or clear expectations, measures and references by which to identify success. They're rife with exceptions for special interests that undermine the spirit of the law; they're chockful of potholes where even the wary and well-intentioned will stumble and potentially be punished for doing so.Even though I really like Seb Paquet's answer regarding innovation ahead of the agencies (finance, especially, has been an area where innovation moved light-years ahead of the regulatory enforcement agencies, for better or worse) I don't think that's "in the public interest", at least not ALL the public's interest. It's in the best interests of our future; but that's not the same as the immediate public interest. (Just like in politics and public companies, short-term goals rule federal agencies, often at the expense of longer-term goals.)Although the regulators should work in partnership with the industry, the industry needs to work in partnership with government, first and foremost, to support transparency and full accountability for both government and industry. If one is truly concerned about the public interest and not just the promotion and regulation of a particular industry (at the expense of others), all stakeholders should be involved in a more meaningful way. This includes representatives of the environment, of the cities getting (or not getting) tax dollars, and of the unions in the companies whose underlying assets are being used as a jumping off point for trillions in swaps and derivatives exposures, for instance.I don't know how you do that. But perhaps the first step is to get rid of all the lawyers, and start speaking English instead of Bureaucrat (in English-speaking countries, of course).

Well, I guess that the answer to which US laws, if any, were broken in the creation of the 2008 financial crisis really depends on how you define the word "US law" and the phrase "creation of the 2008 financial crisis". Really.These are some of the state, federal and industry regulators, agencies, and groups most directly relevant to the 2008 Financial Crisis (as opposed to the 2009, 2010, 2011, 2012, 2013, 20... continuing financial crisis, which I will collloquially refer to as the US financial services industry):Securities and Exchange Commission (SEC)Federal Reserve (FRB)Office of the Comptroller of the Currency (OCC)Office of Thrift Supervision (OTS, now merged into OCC)Commodity Futures Trading Commission (CFTC)State departments of Finance, Financial Regulation, Business OversightDepartment of Labor (DoL, through EBSA, administers ERISA and provides oversight for pension and retirement savings)Federal Trade Commission (FTC)Financial Crimes Enforcement Network, or FinCEN (US Treasury's agency responsible for combatting and enforcing anti-money laundering regulation, like BSA and PATRIOT Act)National Credit Union Administration (NCUA)Federal Deposit Insurance Corporation (FDIC)Financial Industry Regulatory Authority (FINRA, formerly known as the NASD)Department of Justice (DoJ - relevant for enforcement activity)Federal Financial Institutions Examination Council (or the FFIEC; interagency body charged with looking at uniform standards across agencies and regulators)Internal Revenue Service (IRS)FNMA, Freddie Mac, Federal Housing Authority (FHA)Market/Exchange governance groupsPCAOB (Public Company Accounting Oversight Board)State insurance regulators, and the National Association of Insurance Commissioners (NAIC)Credit rating agenciesothers who have either authority, responsibility, or a stake in the global financial services industry, global economy, or consumer protection (now including the relatively new, post-2008 Consumer Financial Protection Bureau, or CFPB, as well as all the international groups, especially those out of the major hubs, like London and Singapore)There are a whole lot of US laws promulgated and enforced through those organizations.Obviously, some laws, rules, regulations, contractual or ethical obligations must have fallen by the wayside or were overlooked, either due to the complexity of their interpretation or evisceration of their intent, through misapplication, ignorance, lack of compliance, failures of enforcement, or cover-up.Each of the agencies and organizations, many overlapping in their authority, have different agendas: for instance, the SEC's focus is on transparency and disclosure in the markets, under the presumption that markets work best when everyone knows just what it is that's being bought and sold; and the OCC is largely about "safety and soundness" of the banking institutions it is empowered to look after. It's complicated.A financial services company and its management, in delivering its products or services, can comply with either the spirit or the intent of a law, or both. Most at least try to comply with both; and certainly it's a far more serious violation when the intent and spirit of a law is violated because a company or its executives completely misrepresents an activity by making false statements (i.e. "guaranteed highest investment return" "everyone qualifies for a mortgage, zero money down!") than if, say, an advertisement is provided to the public in 10-point font rather than 12-point font. The bigger firms are REALLY BIG; and the complexity of managing regulatory responsibility while at the same time trying to maintain profitability, including managing tens of thousands of employees all trying to satisfy individual business targets as well as their client's demands and needs (who on occasion are looking for shortcuts or covering up their own internal ethical lapses), is a very sophisticated and expensive endeavor.The laws or regulations or rules which might have been broken - or not - is not at the root of the creation of the financial crisis in 2008. In my opinion, the root of the creation of the 2008 financial crisis was systemic, not that some one individual failed to comply with a law or ran a massive Ponzi scheme (there will always be "bad apples" in any human endeavor - c'mon, do you think that even though people know the Ten Commandments, they always comply with them, or don't try to carve out "legitimate exceptions"?). Maybe we had lots of not-so-good laws (and now we're just doubling down). The vast majority of bankers were and are not evil or greedy; they were just trying to do their job (see, Hannah Arendt's "banality of evil"). Perhaps the system itself - not only the regulatory and structural issues that relate to systemic risk, like capital requirements or financial services corporations that are "too big to fail" (topics that are within the purview of The Systemic Risk Council) - is sick, with its lack of accountability and transparency in the face of overwhelming complexity, and its' encouragement of the concentration of power and financial reward without responsibility. It's impossible and simplistic to point at any one individual or company or regulator or even Congress and say - yep, it's all their fault. The roots go much deeper than that.There's a dilemma of ethics and values in our trader-culture. It's a classic prisoner's dilemma - where short-term individual profit and gain is elevated and succeeds over community well-being and longer-term viability and relationships. Great financial rewards do not come without risk; many of us think that's only about whether or not a deal is financially viable or whether it's good for us and our interests for the next quarter, and forget that risk includes moral and ethical considerations for the community that can't always be reduced to dollars-and-cents, or effectively captured via pricing models. And if a buyer doesn't do their homework or due diligence on what they're buying, whether it's a home loan or a credit swap or a new TV, it's their own fault if they don't get what they think they bargained for. Caveat emptor. Maybe we'd be better off with no laws about the financial markets, at all, instead of so many specific complicated and tangled ones (driving up expenses in the industry!) and let the 99% eat cake.When you mention in the question's details "financial forms" that were possibly inaccurate, false, fraudulent or incomplete, you are probably referring to SOX (Sarbanes-Oxley) attestations, or perhaps required filings for public companies like annual reports, or disclosures for investment advisors, broker-dealers, or public (and some private) companies promulgated under the various agencies that are charged with oversight of transparency and disclosures. Certainly, there were some people who signed off on things without being fully aware of what they were signing or who did so knowing that some things might not be entirely right; but in the vast majority of cases, executives and management signed off with full disclosure and disclaimers regarding the extent of their attestations. (!!) Audit and financial statement preparation is occasionally an art form; at the very least it often requires making assumptions, some leaps of faith, and exercises of good judgment.It's also an art to slug through voluminous collections of disclosures, requirements and paperwork to understand what people are not saying as well as what they are saying; as well as whether or not it matters and how it matters. It's a big part of my job. There are, and will always be, limits to the law. There are legal and fair differences in how different companies and industries might apply regulation; and there are differences between what a layman might think a law or regulation says. How laws and regulation are applied and enforced is often based on what kind of resources are dedicated to compliance and enforcement efforts, and what the hot topics of the day might be.From the business-side, it is reasonable and practicable to have a goal to want to minimize regulatory interventions, avoid fines and penalties and disruption to the business; and to minimize expenses to be as profitable as possible. As a citizen, it's important to have a system of laws and regulations that establish and reinforce trust in the system. The laws and regulations we end up with are somewhere in the middle; with increasing complexity of the system that's not a good enough place to be, and the 2008 financial crisis was a reflection of that.