The White House Flouts Ethics Rules

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By Richard Bowen, a professor of accounting at the University of Texas at Dallas and a speaker on ethical breakdowns and the financial crisis. Bowen is a member of Bank Whistleblowers United for giving warnings to Citigroup’s board about extreme risks and potential losses to shareholders existing in its mortgage business. Originally published at LinkedIn

“The White House just used a brazen back door move to bypass the Senate”… read the headlines of a recent Vanity Fair article regarding the appointment of Keith A. Noreika as the Acting Comptroller of the Currency, which makes Mr. Norieka the administrator of the federal banking system and acting head of the Office of the Comptroller of the Currency (OCC). The OCC supervises more than 1,400 national banks and federal savings associations and about 50 federal branches and agencies of foreign banks in the United States; which comprises nearly two-thirds of the assets of the commercial banking system. A very strong and powerful position to hold.

Mr. Noreika, formerly with the prominent law firm of Simpson, Thatcher & Bartlett, LLP, where he advised a wide range of domestic and international financial institutions, will now be in charge of regulating the banks he once protected.

However, there are a couple of very interesting twists to this appointment. Not only is Mr. Noreika now regulating the banking industry heretofore he has defended and protected, his appointment is on an acting basis as a ”special government employee” at a position of 130 days. Because of the length of time and that it is designated as acting comptroller this appointment does not require a Senate confirmation.

Talk about loopholes! This loophole means he does not have to sign the President’s ethics pledge, which allows him fewer restrictions on lobbying when he returns to his former work at the law firm. And, here’s another loophole… apparently, government requirements to date mean an acting head of the federal agency has worked at that agency for 90 days. In Mr. Noreika’s case, he was made “first deputy” at the OCC which assured he would get the top position should it become available. Mr. Norieka worked at the agency only a few hours before former Comptroller of the Currency, Thomas was conveniently ousted and yes, the position became available!

I’m not making this up! Remember, President Trump promised his banking industry buddies that he would gut financial regulations. Well, he’s on that path for sure. Mr. Curry, as best he could, imposed tough rules and big fines for wrongdoing. So it appears that President Trump and his sidekick, Treasury Secretary Steven Mnuchin, ride again, gaining another ally in their continued push to undo financial regulations, following the revolving door pattern which exists in government and on Wall Street, where the industry sends key individuals to government; they serve in the Department of Justice, the Treasury, the Securities and Exchange Commission (SEC)  knowing that their real reward is coming full circle – they come back home to Wall Street or serving Wall Street via the law firms which pander to them and reap huge financial rewards.

A spokesman for the Treasury Department, which houses the agency, said Mr. Noreika would face “the same strong ethics laws that apply to all officials serving in the O.C.C.,” including divesting certain assets that pose a conflict and recusal from “any specific matters involving his clients from over the past year.” 

However, the NY Times article goes on to say that seven of the 11 Democrats on the Senate Banking Committee, including Chris Van Hollen of Maryland and Elizabeth Warren of Massachusettssubmitted a letter to Treasury Secretary Steven Mnuchin, raising concerns about Mr. Noreika’s client list and pressing for clarity on his recusal plans.

The letter, also questioning whether Mr. Mnuchin’s appointment of Mr. Noreika was “circumventing” the confirmation process and avoiding certain ethics requirements, called the episode an “apparent political power grab.” “You have chosen to replace the current head with an acting head who is unvetted, has obvious conflicts of interest, and lacks the experience to run an agency that employs almost 4,000 individuals and oversees over 2,000 national banks, both large and small,” they wrote.

In an interview with BloombergSenator Chris Van Hollen, said: “Mr. Noreika is an unvetted attorney who lacks the experience to serve as an independent Wall Street watchdog”… “His work in the private sector creates an unprecedented series of conflicts of interest— further underscoring the need for anyone serving as comptroller to go through the Senate confirmation process.”

According to an analysis of government records by the New York Times in collaboration with ProPublica, it certainly appears that this administration is, in fact, filling its key positions with a small army of former lobbyists and corporate consultants whose intentions are to roll back government regulations at the agencies they once sought to influence. The Times continues with new details to our previous reporting on Trump’s weakening of ethics rules and former lobbyists working on regulations they opposed on behalf of private clients just months ago.

Even the federal government’s top ethics official, Walter Shaub, who runs the Office of Government Ethics and has tracked ethics waivers issued by the previous administration, is being kept in the dark. He told the Times, “There’s no transparency, and I have no idea how many waivers have been issued.”

As Marianne Jennings, J.D., Professor Emeritus at Arizona State University Ethical and Legal Studies, author of The Seven Signs of Ethical Collapsehas said, “people look for loopholes to get around rules and regulations, which while they may be legal, are not necessarily ethical.”

When the U.S. government starts looking for, or creating, loopholes, and I believe this has been steadily evidenced, we are on a dangerous slippery slope. This brazen back door maneuver does not bode well.  I’ve predicted an eventual meltdown; I hope I’m proven wrong.

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  1. ambrit

    In times past, I’ll posit that religious based “awakenings” and reform movements played the role of ethical watchdogs and balancing mechanisms. With formal religion losing it’s “village elder” status, I see nothing of comparable stature replacing it as arbiter of ethics, society wide. The government can do so in more restricted ways, but that is subject to the whims of elite ideology. When that ideology is venality and acquisitiveness, ethics becomes a cue word, and little else.
    Eliot was right; we are the hollow men.
    Read, and re-read:

      1. ambrit

        Who did the entertaining, the shadows of men?
        Then there were the helots. As defined by Hollywood, land of our modern entertainers, in “Meet John Doe,” directed by a great admirer of Mussolini, Capra:
        Did an ancient Greek sophist need credentials?

        1. skippy

          “Did an ancient Greek sophist need credentials?”

          I hear the Romans – assumed – the role….

          1. ambrit

            That would make them credentialous fools then. Good ambiguous entendre there, worthy of Sokrates.

            1. skippy

              The Romans folded higher Greek attributes into greater Roman culture and made it seem Roman in nature,

              1. ambrit

                Back from work and consider that the culture determines how the technical “virtues” are applied. Didn’t the Greeks and Romans not appreciate technical skills for themselves, but for what the skills could contribute to a “personal aggrandizement?”
                Could the Greco Roman world even have a “technocracy?” Just skilled workers, mehaps.

              1. ambrit

                Live in San Diego with King Crimson is as good as it gets.
                Head banging in 15/16 time.

                1. craazyboy

                  Dang. Wadda coincidence. Been learning Tool’s “The Pot” this morning. Great guitar riff. Not too tough to play either. Except too many notes to remember and I go too slow. They say you need to develop finger memory.

                  1. ambrit

                    Yes. It’s like, say, martial arts. Your muscles have to “remember” the move. How that works, I haven’t a clue. It sounds too similar to those pesky Midichlorians of the Lucasverse. That’s why mom would ping me for not practicing enough on the Urhu.

    1. DH

      Modern organized religion in the US appears to be willing to tolerate anything in order to get anti-abortion, anti-LGBT, and anti-contraception laws passed. Everything else appears to be negotiable.

  2. Off The Street

    Too big to have ethics seems to be in vogue, although it may not have the same ring as too big to fail or jail. Current trends show once again that in Washington, as in New York, the shocking thing is not what is illegal but what is legal. Each new episode provides greater parallels with the Ancien Régime where the nobles had various tax-avoidance schemes and then one fine day the Etats généraux just came along.

    Next, we’ll find out that the health care plan will include a restriction on salt, of course for our own good, as a latter-day acknowledgement of the gabelle salt-in-the-wound nature of modern life.

  3. Chauncey Gardiner

    Re: …”This brazen back door maneuver does not bode well.   I’ve predicted an eventual meltdown; I hope I’m proven wrong.”

    Based on the self evident unwillingness of government to implement, fund and act on policies to prevent recurrence of the 2008 financial collapse, that also seems to me to be the ultimate destination.

    Due to the willfully intentional nature, I’m even beginning to question whether that isn’t their preferred destination; which in turn raises a question about whether this is just another looting expedition, or something else?

    1. Richard Bowen

      An interesting observation, Chauncey.

      I don’t think they are seeking another breakdown. To use your term, this is just greed-driven, opportunistic looting.

      I am very concerned about the country we are leaving to our grandchildren and their grandchildren.

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