Saturday, July 11, 2015

Keir Gumbs - The SEC Door Keeps Revolving

SEC candidate Keir Gumbs
The mainstream and social media attention focused recently on two high profile African-American lawyers and the troubling ethical issues surrounding the revolving door that exists between the Securities & Exchange Commission, Department of Justice, the Treasury Department and the private sector have been on my mind this week.
Last Wednesday I blogged about the news that former Attorney General Eric Holder is taking a high-paid position with his former law firm Covington & Burling.

Now it's not exactly front-page news but there's a lot of political maneuvering going on regarding the possible appointment of Covington & Burling corporate attorney Keir Gumbs to replace outgoing Democrat Luis Aguilar on the SEC.

This morning I got an e-mail from Democracy For America regarding the joint pressure being applied to the Obama administration from The Wall Street Journal, the financial industry and some of the Congressional Republicans who want Gumbs appointed to the SEC, and are also actively seeking to block any appointees backed by progressive Democratic Senator Elizabeth Warren. 

A recent Wall Street Journal editorial went so far as to accuse Warren of leading an "effort to pack the SEC with anti-business activists"- which is the kind of editorial tone one can expect given that Rupert Murdoch now owns the WSJ.

Senator Elizabeth Warren terrifies Wall Street
That characterization strikes me as just a bit melodramatic considering that she's on record as trying to protect the interests of the majority of the American people whose savings, mortgages, salaries and jobs were all deeply affected by the Great Recession.

We now know the GR was brought on by a toxic combination of lack of regulatory government oversight (including the SEC), and the unchecked greed of the nation's "too big to fail" banks and Wall Street firms whose complex high-risk gambles on mortgage-backed securities caused the unraveling of our financial system in the first place.

Considering the fragility of our still-recovering economy, common sense suggests the American people need some balance on the SEC to ensure that strong regulatory oversight is in place to ensure that the nation's financial institutions don't tank the economy again just make a few bucks for the 1%.

Such oversight is both reasonable and fair; not "anti-business".

Reporter Owen Davis wrote a really informative article on the International Business Times Website back on June 15th titled, "Revolving Door Concerns Surround Potential SEC Nominee Keir Gumbs" that offers some detailed insight into how corporate attorney Keir Gumbs' has actively lobbied on behalf an array of large corporations over the course of his impressive career.  

As Davis notes in his article, The Intercept was the first to report about some specific ways that Gumbs helped Covington & Burling's Fortune 500 corporate clients find ways to avoid public scrutiny of their political donations to the array of secret "dark money" 501(c)(4) and 501(c)(6) organizations that funneled over $300 million into the 2012 presidential campaign; and thanks to the SCOTUS decision in Citizens United, even more of that dark money will flow into the 2016 race. 

I've got nothing against Keir Gumbs personally or anything, but is the SEC really the place for a corporate attorney who conducted seminars for corporations on how to keep the public from knowing how much money they pour into the political process?

Davis' article also reports that when the American Petroleum Institute (a national trade association that's represented US oil and natural gas interests since World War I) met with SEC officials to establish anti-corruption rules on the open disclosure of payments to foreign governments, guess who represented A.P.I?


Those disclosure rules will be finalized in 2016 - after the two new SEC appointees have begun their tenures and it doesn't take a genius to figure out how Gumbs will vote on that or whose interests he'll have in mind when he does.

In some ways I suppose the fact that Republicans are lobbying for an African-American corporate attorney to be nominated to the SEC by President Obama can be seen as positive in terms of diversity within the ranks of both the upper echelons of corporate law and on the SEC itself.

Based on what I've read of Gumbs' track record as an attorney there's no doubt he's qualified for the position, after all he was a legal adviser to the SEC back in 1999 and by the time he left the SEC to join Covington & Burling in 2005, he was an adviser to Roel Campos (pictured left).

Campos was the SEC commissioner appointed by George W. Bush who left to (drum roll please...) join a private practice.

He was later one of a group of former SEC officials who sent a letter to the Financial Stability Oversight Council in February 2013 advising the FSOC members to "back down from its efforts to pressure the SEC into adopting new rules for the $2.6 trillion money market fund industry" according to a Reuters article written by Sarah Lynch.

But my concern with Gumbs is more about how his insider influence on the regulatory power over the SEC to keep the big banks and Wall Street in check will affect the long-term economic interests of the American people as a whole.

And I'm certainly not alone in that, tens of thousands of concerned American citizens have already signed petitions calling for President Obama to nominate strong regulators to the two SEC positions that must be filled.

Current SEC Chair Mary Jo White
Even if Gumbs gets the nomination, Democrats will still have a 3-2 advantage on the SEC, but the current SEC Chair Mary Jo White has also been the target of criticisms of conflict of interest for her record as corporate lawyer for the law firm of Debevoise & Plimpton - who like Covington & Burling, represents a Who's Who of Wall Street clients.

In addition to ex-Attorney General Eric Holder, Covington & Burling also has former members of the Treasury Department and Department of Justice on it's roster - including the former head the DOJ's Criminal Division, Lanny Breuer. 
Regardless, my political "Spidey Sense" tingles whenever members of the same Republican party that actively works to suppress the voting rights of racial minorities supports a black guy for anything. 

Whether Keir Gumbs gets nominated to the SEC or not, the larger issue of the ongoing revolving door policy that shuttles corporate insiders back and forth between private firms and positions within agencies of the federal government responsible for the oversight of their former clients will continue to cast a shadow on the ethics of the American political system.

And the "Democracy" we so often criticize other nations for suppressing. 

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