It appears that all of the regulators, the SEC, the New York Fed, Finra, the CME and the Commodities Future Trading Commission (CFTC) were all asleep at the wheel when Jon Corzine’s $6.3 billion trade in European bonds sank the trading powerhouse. It appears at least $600 million, maybe $700 million is missing and nobody has a clue where the money is, its customers money.
But the reason, regulators who theoretically oversea the securities markets are all part of the revolving door between Wall Street, the government, the banking industry, and often Ivy League academia. The William Dudley, who runs the New York FED, is a former Goldman Sachs Banker. Mary Shapiro, who runs the SEC, used to be the CEO of Finra. The Commodities Future Trading Commission Gary Gensler, is a former Goldman Sachs banker and an aide-de-camp of Larry Summers when he was the go-to economic guy for U.S President William Jefferson Clinton. Richard Ketchum, the head of Finra, used to be chief counsel for Citigroup’s investment bank, a bank which would not exist without bailouts from the taxpayer. Don’t know much about Craig Donohue of the CME Group, but reckon he was making a Pirates pay of around $3.6 million in 2006. It is all just one big incestuous revolving door. Woe is us.
Chesapeake Energy’s CEO Aubrey McClendon, shows that outrageous pay is not just confined to The Pirates of Manhattan. It appears shareholders–who at the end of the day most likely to be funded with your 401(k), are thrown under the bus on a routine basis. As usual, CEOs extract monstrous paydays while rank and file employees get thrown under the bus. As I document in my upcoming book, The Pirates of Manhattan II: Highway to Serfdom, Chesapeake Energy has thrown rank and file folks into target-date mutual funds, while CEO Aubrey McClendon robs the store. In 2008, McClendon extracted $112 million in compensation, and sold 500 antique maps to his company for an eye-popping $12.1 million.
It does not appear that much will change in this corporate American culture. But more will be revealed in the next book as how your 401(k) actually fuels this mess. As Don Corleone from the Godfather once said, “A man with a briefcase can steal more money than a hundred men with guns.”