Every morning I check my RSS feeds. This morning I was struck by the fact that two unrelated posts sort of fed into one another.
The first was a story about hedge funds that are looking to get a retroactive get out of jail free card from the SEC for blatantly violating rules requiring them to register as broker-dealers in order to collect the massive fees they impose for losing other people's money.
The Bloomberg story acknowledges that the billions in fees collected by the PE industry over decades appear to have been illegal, noting that an SEC official “…signaled in a speech last year that transaction fees the private-equity industry had been taking for decades may have been improper because the firms weren’t registered as broker-dealers.” This official, the chief counsel of the Division of Trading and Markets, now appears to have been thrown under the bus, as his colleagues scramble to find a way to accommodate their PE overlords. Bloomberg makes no bones about the reason for the about-face, titling an entire section of the article “Powerful and Successful Lobby.”
The article quotes industry mouthpieces making the usual intelligence-insulting arguments, including the claim that registering as broker-dealers would be too expensive and that the broker-dealer regime would provide no additional investor protections beyond the status quo, where PE firms are already registered as investment advisers. This latter claim is outright false. Customers who have been harmed by the bad acts of broker-dealers have much stronger rights than investment adviser clients because broker-dealer clients can sue to recover for investment losses. Similarly-situated customers of investment advisers can only seek recovery of fees paid to the adviser, but not recovery of investment losses.
via Naked Capitalism
So here's an example of the top .01% buying its way out of criminal liability and, potentially, into a position to siphon more money out of the economy without, of course, doing anything of value for the economy or society.
Next up was Dean Baker's latest, in which he takes on Arthur Brooks, president of the American Enterprise Institute, who tell us that we should stop being jealous of our betters and just suck it up while they impoverish us.
Brooks tells us that people who are unhappy about the enormous upward redistribution of the last three decades are guilty of the sin of envy. Let's try an alternative hypothesis, large segments of the public are angry because the wealthy are rigging the rules so that an ever larger share of the pie gets redistributed to their pockets.
via Beat the Press
Also see Krugman, who makes the same point.
Loop back to the Naked Capitalism post: a perfect example of what Baker is talking about. How many people in the bottom 99.9 get to retroactively legalize criminal behavior and keep their ill gotten gains to boot?
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