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Revolving Door Regulators
August 6, 2013

Greetings!

 

There are many forms of corruption. Perhaps the most pernicious is where an elected or duly appointed representative of the citizenry leaves office to use the sloughed off position for financial gain in the private sector.

Let's set up a definition for such (mostly unregulated) behavior. I will give it a phrase: "inside-outside gambits."

What is an inside-outside gambit? It is the use of information obtained in the course of a former governmental position by an official for financial gain, directly or indirectly, soon or immediately after leaving government employment in that position. Such information includes contacts with decision-makers in the government; providing information about proprietary conversations leading up to the promulgating of laws, rules, and regulations; access to insiders and knowledge of their views; navigating the systemic and organizational structure; non-public facts regarding the governmental plans or condition that could provide a financial advantage. Note that I use the phrase "inside-outside," not "insider trading."

I am not talking about a situation where there is the illegal trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the subject company (such trading being illegal).

However, the effect of "inside-outside gambit" and "insider trading" is practically the same: these strategies lead to an unfair, usually economic, advantage.

 

You might be interested in reading my article about the newest inside-outside gambit affecting residential mortgage lenders and originators!

 

Best wishes,
Jonathan
 

  

 

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Jonathan Foxx - Portrait
Jonathan Foxx
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ARTICLE CONTENTS
The Inside-Outside Gambit
The Four Horsemen
A Business Model for Former Regulators
Partners in Business
Making a Market in Non-QM
Timeline
What did they know, and when did they know it?
Extinguishing the Fire
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ARTICLE - Excerpt
Senator yesterday. Lobbyist today.

Representative yesterday. CEO today.

Cabinet level appointee yesterday. Bank Chairperson today.

Government Agency Director yesterday. Law firm senior partner today.

CFPB Regulator yesterday. Competitor today.
  
  
  



ARTICLE - Excerpt
On July 31, 2013, the House Committee on Oversight and Government Reform and the House Committee on Financial Services sent an eight page Congressional letter to Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB). Signed by a bi-partisan group of Representatives, it expressed concern about the recent departure from the CFPB of four high level officials. The Letter forms the basis of further inquiries by the Committees. Noting a news report, the Representatives indicated it appears that certain officials "have left the CFPB in order to profit from rules they helped create."

Who are these individuals? What were their former CFPB positions?
  
  
  

 

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