Time to Fire Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Fmr Firm

from Naked Capitalism:


Time to Fire Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Former Firm, Debevoise
Posted on June 17, 2015 by Yves Smith


Pam Martens and Russ Martens published a mind-boggling expose yesterday on how the SEC is refusing to stop an abuse by major banks that increases systemic risk. Large banks are continuing to fake their capital levels, via a ruse called a “capital relief trade” with hedge and pension funds. And Mary Jo White, the chairman of the SEC, is aware of this practice, which undermines the safety and soundness of financial institutions, and has done squat about it.

White is not just head of the SEC but also a member of the Financial Stability Oversight Council. She is undermining it and financial reform generally by her failure to take on this practice. Pam Martens and Russ Martens also charge the SEC chairman and her director of enforcement, Andrew Ceresney, with cronyism, since they both hail from the law firm Debevoise, which is an active player in this practice.

As much as there has been considerable consternation over Mary Jo White’s numerous lapses, like hiding behind the need for more data as an excuse for doing nothing about high frequency trading, her failure to secure more admissions of wrongdoing in SEC settlements, and her refusal to comply with Dodd Frank by virtue of too freely issuing waivers for mandatory sanctions, even to recidivist bad actors, this dereliction of duty is considerably more serious, because it increases systemic risk in a direct, tangible way.* Remember that technically permissible balance sheet fakery at Lehman, also known as Repo 105, allowed it to mask how sick it was. ...............(more)

http://www.nakedcapitalism.com/2015/06/time-to-fire-mary-jo-white-sec-covers-up-for-bank-capital-accounting-scam-promoted-by-her-former-firm-debevoise.html