Tuesday, April 27, 2010

Regulatory capture and the revolving door

The Columbia Journalism Review's primary blog, The Audit, recently linked to a Financial Times article about the SEC civil suit of Goldman Sachs. Citing "several former high-ranking officials," the article argues:

"The high stakes legal confrontation between the US Securities and Exchange Commission and Goldman Sachs has been mishandled by both sides and probably should have been avoided."

This isn't an entirely unorthodox line of reasoning. We've heard it from several corners (e.g. the business-oriented cable networks) and it's legitimate to question the potential politicization of the SEC suit. But buried in the seventh paragraph is this gem:
“I think the case will come back to bite the SEC. Goldman is really struggling and something awful could happen,” said one former top official who, like most of those interviewed, asked for anonymity because their employers either work for Goldman or are being probed by the SEC.

Talk about a misplaced lede. The Financial Times, like many of its counterparts in the media, has a tendency to gingerly disclose the affiliations (past or present) of its sources. The Nation recently ran a piece about the cable news networks' utter dereliction of duty in disclosing the tangled web of politics, business, and advocacy. Think about a lobbyist for a coal company arguing against cap and trade and being introduced as an "independent consultant." Or a La Raza affiliate claiming that immigration reform is a do-or-die situation. The potential for misleading the public is unlimited.

Without a committed watchdog media the bureaucrats and politicians would be granted free reign to administer and legislate as they see fit. It doesn't take a genius to see where that leads. New media is making up for some of the slack, but if the big networks and publications are unable to present analysis ethically, the functions of government could operate with little or no oversight.

Link to article: http://www.ft.com/cms/s/0/097a1850-4ef8-11df-b8f4-00144feab49a.html?catid=7

-Mike Pawlows

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