Where Bank Regulators Go to Get Rich

Schapiro cc

The scam goes like this-

The regulators work in the government for a while figuring out how to navigate and game the system. While there they create new and more complex regs which only the regulators know how to navigate.

Said regulators leave office and then join firms in downtown Washington DC, usually with plusher offices and much larger paychecks. The firms are then hired by private industry to make sense of the jumble of laws the regulators created during their tours in the regulatory agencies.

Rinse and repeat.

(From Bloomberg)

Taleb told me the other day that he views (Mary) Schapiro’s move to Promontory — and to a seat on the board of General Electric Co. — no differently. “I find Mary Schapiro morally repulsive,” he said, because there is an “implicit deal” whereby regulators such as Schapiro and Blinder (and many others) “make regulations complex” and then “sell their services at a higher price when they go to the private sector.”

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