Apparently, the SEC's commissioners voted on partisan lines to bring a civil fraud case against investment behemoth Goldman Sachs. While Kevin Drum rightly finds Republican efforts to politicize the situation absurd, I'm more surprised by the fact that The Wall Street Journal reporter can't seem to connect the split vote with a new attitude among financial regulators:
In recent years, splits on high-profile enforcement cases have been rare. [SEC Chair Mary Schapiro], appointed by President Obama, told the Journal in January that the agency in her tenure has voted unanimously "north of 90%" of the time on enforcement cases. The agency has split more frequently on the rules it passes to regulate the industry and corporate disclosures.
What else has happened in recent years? Oh, yes, financial regulation has been incredibly lax. So perhaps more splitting is a sign of a positive shift in regulatory culture. This apparently controversial decision to pursue the case was brought by Schapiro, who had been called "a safe, Wall Street favorite" when she was nominated for the position of chair. I imagine she's not a favorite there now.
One other interesting note: Goldman officials told the WSJ that the SEC suit was a huge surprise, something that co-General Counsel Greg Palm echoed this morning, while the SEC tells The Washington Post that the suit came after months of negotiations, with the earliest warning coming last summer. Since meeting records will usually come up in discovery or the litigation process, I look forward to resolving this question. Who do you think is right?
-- Tim Fernholz
