The Wall Street Journal reveals a good way to make money in the new US economy: Work for agencies like the CFTC who get to write huge complex and vague rules for financial companies, with lots of discretion and supervision, then go work for the companies who have to comply with said rules.
A few tidbits from “Hot Commodities: CFTC Staffers” (which is a news story, not an editorial)
Dodd-Frank has prompted strong demand for staffers from the Commodity Futures Trading Commission. The law gave the agency broad new responsibilities to write rules for complex derivatives called swaps that had been largely unregulated. Many rules already are in place, while others will take effect next year. The new swaps rules have swept many more financial firms under the agency’s jurisdiction, boosting demand for even midlevel staffers with just a few years’ experience.
At least nine CFTC employees have decamped since June for firms in finance, law and accounting that are figuring out how to comply with the Dodd-Frank overhaul. Six of the staffers were directly involved in rule making and three were in enforcement.
Take, for instance, Julian Hammar of the CFTC’s general counsel’s office. Mr. Hammar recently left for the law firm Covington & Burling, where he will advise clients on the implementation of Dodd-Frank.
Carl Kennedy, a staffer to Commissioner Scott O’Malia, went to J.P. Morgan, and Adedayo Banwo, a lawyer in the agency’s general counsel’s office, joined Deutsche Bank.
A series of CFTC cases related to alleged rigging of the London interbank offered rate, or Libor, also has given the agency a higher profile, fueling private-sector demand for employees in its enforcement division. At least three people have recently left the division.
PricewaterhouseCoopers had no former CFTC employees on staff two years ago, but the firm has hired three in the past 18 months, including former Enforcement Chief Counsel Phyllis Cela, said Dan Ryan, chairman of the firm’s financial regulatory practice.
“We’ve been working for mostly large banks with respect to helping them prepare for derivatives regulations,” Mr. Ryan said. Ms. Cela advises clients on “what steps they should take now to avoid future enforcement actions,” he said.
At the risk of belaboring the obvious, if rules are clear and simple, you don’t need to hire the people who wrote them, and who have lots of buddies on the inside deciding what they mean, to survive. And in the regulatory-capture department, good luck to new smaller companies who can’t afford to hire their own personal rule-soothsayer with a good contacts list on his phone.
…critics of the revolving door between Washington and Wall Street say they worry ex-staffers could use their personal connections to pressure the agency into crafting rules favorable to their new employers.
No, you don’t say?
John H. Cochrane
Wed, 02 Jan 2013 21:24:00 GMT