An inside job….the need for more whistle blowing !

August 13, 2012

One of the big differences between Democrats and Republicans is their respective attitudes toward government regulation.

The Republicans want very little regulation of the ” free market ” citing the administrative cost of regulation and the potential repressive impact on business activity. Its the  ” we don’t need big government telling  us what to do ” argument.

Conversely, the Democrats are able to cite many recent examples where the un-regulated rich and powerful have taken advantage of middle and low income families.  The Democrats claim they only want to intrude in free markets via regulation where it is shown that lack of regulation is creating a  playing field which is not level….the we need REFORM argument.

Since I’m an issue by issue type of guy, I’ve given some grass roots ( and probably over simplistic ) thought to this problem. Deciding exactly how my ideas get implemented is above my pay grade,  and would definitely interfere with the beach time I need to devote to my market surfboard,  ” SPY”

But here goes –

Congress gets our votes on the assumption they will  enact rules and regulations that will protect us from the avarice of the moneyed and powerful few.  The moneyed and powerful offset their ” few” status by spending  lots of money on lobbyists and looking for ways to get any kind of an edge.  This gets very murky when you consider what can be hidden in a several  thousand page piece of legislation, but, thanks to the resourcefulness and relentlessness  of the Press most of the muck rises to the surface pretty quickly.

The expensive part of the reform regulatory process takes place once the rules have been set into law, but then,  become covertly broken or discreetly disregarded.  It wasn’t very nice of Bernie Madoff to fool those bright SEC lawyer investigators as badly as he did.  But, as expected, the SEC ultimately complained that they are way underfunded in their  investigatory activities.  …..Right !

In my opinion, investigation is the most expensive and least effective aspect of government regulation. 

How to fix this ?… For sure,  we don’t need an army of expensive per diem investigators.  What we do need is  an army of incentivized informants controlled by a reasonably sized cadre of  SEC case officers the way a CIA case officer would  control a web of foreign agents.  If an informant hits pay dirt, he would be rewarded as a whistle blower with a small percentage going to his case officer.  This would increase  investigatory effectiveness by a multiple of twenty and simultaneously reduce expense.  Criminal and civil penalties for corporate, wall street and government malfeasance could be ratcheted up to seriously discourage that first step off the straight and narrow line.

I would increase the budget for enforcement activity to make certain good cases are not put on ice.

The keys to success are ( 1 ) clear rules and regulations, ( 2 )  incentivized informants, and ( 3 ), promp judicial  follow through.

Something like this is what I would like to see implemented.  But, on a scale of 1 to 100 I think this idea has a chance of about a 9 !

Richard Maurice Gore ( aka ) Dick, RMG, Richie from Throggs Neck and Smiley from Woodlawn….( all me ).



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