Chuck Schumer

This one goes under the title, "be careful what you wish for." Chuck Schumer has always been known as a media hog. There's never been a live TV camera he hasn't been reluctant to step in front of. (Radio? Another thing altogether but TV cameras, on, rolling, "yes, please, absolutely.") He holds press conferences on Sundays, taking advantage of the knowledge that Sundays are slow news days. An idle media with nothing better to do will cover him.

I'm not quite sure where he is today, but I imagine that he's ducking every TV Camera in sight. He did get the front page story in The New York Times today but boy, it sure doesn't do him too many favours, highlighting instead how, time after time after time he promoted legislation to decrease regulation and oversight of the Wall Street community. It is well worth a read but here, a couple of excerpts:

‘Their Go-To Guy’

To Christopher Cox, the Republican chairman of the Securities and Exchange Commission, the need for action was obvious in the spring of 2006.

His agency, which would later be criticized for a 2004 ruling that let banks pile up debt, had grown deeply concerned about lack of oversight of the nation’s largest credit-rating agencies, like Standard & Poor’s and Moody’s Investors Service. Linchpins of the financial system, their ratings are vital to safeguarding investors by evaluating the risks of bonds and other debt. After the collapse of Enron and WorldCom, which had repeatedly been awarded favorable ratings, the agencies had agreed to meet voluntary standards.

But the S.E.C. concluded that those agreements were inadequate, so Mr. Cox urged Congress to give his agency oversight powers. “Without additional legislative authority, the S.E.C. will not be able to regulate in a thoroughgoing way,” he told the Senate banking committee at an April 2006 hearing.

The plan drew broad, bipartisan support on Capitol Hill. But executives at the credit-rating agencies soon began pressing Mr. Schumer and other allies in Congress to block the proposal or at least limit its reach, according to current and former employees.

“They knew Schumer would support them,” said one former Moody’s executive, who asked not to be named because he still works in the industry. “He was their go-to guy,” the executive said.

While the Manhattan-based agencies were not significant campaign donors to Mr. Schumer or the Senate campaign committee, their lobbyists and many of their clients were.

At that time, revenues for the agencies were skyrocketing. The housing market was robust, and Wall Street investment firms were paying the agencies to rate various mortgage-backed securities after first advising the firms — and also collecting fees — on how to package them to get high credit ratings.

It was an obvious conflict of interest, financial experts now say. Despite their high ratings, many of those securities, based on risky loans, would prove worthless, roiling markets and threatening financial institutions worldwide.

But Mr. Schumer argued that the companies voluntarily met requirements to eliminate such possible conflicts. He suggested that regulators simply encourage competition and disclosure of agencies’ ratings methods. There was perhaps no need for an intrusive new law, he said in the spring of 2006. “They’ve implemented their codes of conduct,” Mr. Schumer told Mr. Cox at a Senate hearing. “They’re making good-faith efforts.”

Mr. Schumer could not stop the legislation from passing, but he managed to get the measure amended so that it explicitly prohibited the S.E.C. from regulating the procedures and methods the agencies use to determine ratings.

Richard Y. Roberts, a former S.E.C. commissioner, said the amendment Mr. Schumer won was troubling, adding that it could block the S.E.C. from punishing a credit-rating agency that consistently issued unreliable ratings.

Sean J. Egan, managing director of a small Pennsylvania agency, Egan-Jones Ratings, and a proponent of the tougher regulations, was more blunt. “The bill was eviscerated,” he said. “You have stripped away basic safeguards for the investors.”

And this one:

In 2001, Mr. Schumer and Mr. Gramm jointly proposed legislation that would cut fees paid by Wall Street firms and others to the S.E.C. in half, or by $14 billion, over the coming decade. Their proposal included some extra money for salaries of commission employees.

But with trading volumes high, Mr. Schumer argued, the government was collecting far too much money from those fees and using it to subsidize other government operations. “It is a tax, an unintended but very real tax, on all sorts of investors,” he said at the time.

But some Democrats, pointing to the recent corporate accounting scandals, argued that the S.E.C. budget should be doubled or tripled so it could more effectively combat fraud that could lead to a major economic collapse.

“We are making a tragic mistake,” Representative John J. LaFalce, Democrat of New York, warned in arguing for a much smaller reduction in S.E.C. fees.

“We give the industry what it asks for unwittingly.”

Mr. Schumer’s argument prevailed, and the fee cut passed overwhelmingly."

In the article Schumer defends himself, says that he's not omniscient and that he too was misled. He also argues that New York would not exist in the way that it does today without the financial community that comes here to do business. He's got that right. My friends are in a state of panic. One who owns a store on Atlantic Avenue, a lovely store full of beautiful furniture and gorgeous jewelry, all at extremely reasonable prices, is not making any sales. Another is losing business. Projects that were promised are now being pulled. I was at a party last night where the conversation was consumed with the talk of layoffs, both the misery of those who receive the news and those who dole it out. I myself am figuring out how the bloody hell I'm going to make a living. Possibly in the food and wine business. I figure that folks aren't going to stop eating, and they certainly aren't going to stop drinking, through all of this.

Now I recognise that, as Schumer puts it in this article, you have to figure out a way to entice people to do business in a place. But if the things you entice them with (decreased regulation, decreased oversight), put the lives and livelihoods of your constituents in jeopardy then there should be no deal. Time after time after time industry has dishonored the trust given to them to regulate themselves or to do the right thing voluntarily. As someone I met long ago said, it's like asking a crack dealer to police himself. He's not going to do it. Not when the bottom line is profit above all else.

When, I wonder, will our politicians figure this out?