FORTUNE — Have you ever read a passage or a line from a speech and thought, “He didn’t actually say that, did he?”
I had just that experience this morning in reading a delivery made by Douglas Shulman, commissioner of the Internal Revenue Service during the time when the targeting of selected conservative groups was launched. For those who care about truth, transparency, and integrity I can only hope that we learn all the details of that activity.
What about Shulman himself, though, and his past? Where did he work prior to joining the IRS?
Under the heading of “you just can’t make this stuff up,” Shulman was vice-chairman of Wall Street’s favorite self-regulatory organization FINRA prior to being appointed by President Bush to run the IRS in early 2008. Listen to what he said in 2007 while still at FINRA:
“We like to say that in the area of markets, we no longer chase bad guys … “
I just spilled my coffee. How could any regulator ever issue a statement such as that?
Shulman is actually referencing the fact that so much of the markets have become technically orchestrated by computers that regulators need to be more focused on these aspects than the individuals per se. He then goes on:
“While of course this is an exaggeration, the key for market participants is to put into place the proper controls to ensure that their computer systems are compliant with rules and regulations and are operating as intended. This will only become more important over time, as the world becomes more and more automated.”
Let’s stop here for a second. Certainly, the world has become more automated. Regulators have been way behind the curve in keeping pace with the technology utilized by Wall Street banks. But rather than delving into that, was Shulman’s statement about “no longer chasing bad guys” really an exaggeration?
Shall we ask those investors victimized by Bernie Madoff, Allen Stanford, the flash crash, the bad apples who stuffed ARS into client portfolios, those manipulating Libor, naked short selling, robo-signing and predatory lending? What about the small broker-dealers themselves who were “picked off” to the tune of anywhere from $180-370 million by FINRA’s own execs and the large broker-dealers in the merger of the NASD and NYSE Regulation to form FINRA?
Were all of these massive financial transgressions orchestrated by computers or were they overseen and executed by individuals, that is “bad guys?”
Perhaps, just perhaps, some member of Congress may want to inquire of Mr. Shulman what he might share on these fronts and connect the dots of Wall Street-Washington incest.
And that is no exaggeration.
Larry Doyle is a Wall Street veteran, having worked at such banks as First Boston, Bear Stearns, and Union Bank. He blogs at www.senseoncents.com
