Mary Schapiro Quotes
The SEC got more than 100 rules to write under Dodd-Frank, the lion's share of all the agencies. And we've moved, I think, with a tremendous sense of urgency. But it takes a long time to write rules and get them approved by a five-member commission.
Schapiro, Mary. "Mary Schapiro Reflects on Her Time at the SEC." Interview by Kai Ryssdal. Marketplace, American Public Media, 26 Nov. 2012.
This practice to try and derail bills they objected to emanated from the hyperpartisanship of the time. The conservative base of voters so opposed the legislation that they would not punish and not vote for a member of Congress for deliberately lying as long as the lies contributed to the conservative political ideology. Some of the members had this as a justification for lying in this way: “These provisions are exactly what the Democrats would add as an amendment or by regulations if they could. It is important that the voters know that they will do if the legislation passes and realize that they people who support this terrible legislation really desire to socialize the American Economy.” Often, they would base their judgment about what the Democrats wanted by taking a single statement made by someone at the extreme left and claim that that was Democratic party thinking. The tactic worked in a number of cases, but not with Dodd-Frank which passed despite a Republican filibuster in the Senate. Some of the extreme liberals in Congress then started to use the techniques in the House of Representatives where they were in the minority.
The Dodd Frank bill was designed, in the aftermath of the large bank induced meltdown of 2008 and the Great Recession, to regulate the banking industry so that no bank would be “too big to fail”. However, although the bill placed many restrictions on the banks to prevent much of their risky economic behavior, which the banks complained inhibited their growth and profitability. However, the bill did not put any limits on the size of the large banks and their critical proportion of the U. S. Financial System. If a bank was large enough, the government did not dare allow the bank to fail regardless of how profligate the Bank had been with its depositors’ money. So the shareholders made big money from the Bank’s risky behavior if it turned out well, and if not the taxpayers had to bail the banks out, because they were too big to fail without causing much of the rest of the country to also fail. Warren and others wanted a simple solution. Break up the large banks into smaller ones and then if any one of the small units makes poor investments, the bank could fail and other than its shareholders and creditors, the effect would not be so serious that the government could not allow the bank to go into bankruptcy. Mismanaged banks could fail like other mismanaged companies and not take down much or the rest of the country with them. But the banks lobbied to prevent that, and by 2014, 6 years after the taxpayers had to bail out banks that were too big to fail, many of the banks were twice as large as they were when they were already too big to fail.
Modern finance is so complex and convoluted, that any laws or regulations that government makes are quickly evaded by even more complex and convoluted schemes which the legislators and regulators have to try and control. By the time they learn and understand and finally develop measures to regulate those, the cycle starts again. Hence the “fool’s errand”
Mary Lovelace Schapiro served as the 29th Chair of the U.S. Securities and Exchange Commission (SEC). She was appointed by President Barack Obama, unanimously confirmed by the U.S. Senate, and assumed the Chairship on January 27, 2009. She is the first woman to be the permanent Chair of the SEC. In 2009, Forbes ranked her the 56th most powerful woman in the world.
