While America focused on New Hampshire, a classic example of revolving-door politics took place in Washington, going almost completely unnoticed. It's a move that ranks up there with the hire of Louisiana congressman Billy Tauzin to head the pharmaceutical lobbying conglomerate PhRMA -- at a salary of over $2 million a year -- immediately after Tauzin helped ram through the Medicare Prescription Drug Bill, a huge handout to the pharmaceutical industry.
In this case, the hire involves Walter Lukken, who toward the end of the Bush years was the acting head of the Commodity Futures Trading Commission. As the chief regulator of the commodities markets, it was Lukken's job to spot and combat speculative abuses and manipulations that might have led to artificial price hikes and other disruptions.
In 2008, the last full year of his tenure, Lukken presided over some of the worst chaos in the commodities markets in recent history, with major disruptions in the markets for food products like wheat, cotton, soybeans, and rice, and energy commodities like oil.
By insisting that the spike was "not a result of manipulative forces," Lukken helped Wall Street in its efforts to avoid reforms that might have prevented such abuses, like the closing of a series of loopholes and exemptions that allowed a handful of major speculators to play a lopsided role in the setting of commodity prices.
So what was Lukken's reward for helping the financial services industry avoid such reforms? Well, Lukken has just been named to head the Futures Industry Association, or FIA, the chief lobbying arm of futures investors.
This follows the Tauzin pattern of revolving-door hires: a government official carries water for a powerful industry, then moves on to take the cushy job with the industry's lobbying arm once he leaves office.
Among people who follow these markets for a living, the Lukken hire had an embarrassingly over-the-top quality, like a CEO who goes the appearances-be-damned route and puts his 23 year-old secretary/mistress on the board of directors.
It was a see-no-evil, hear-no-evil approach to government oversight, which had far-reaching consequences in that crisis year. The CFTC, remember, also has purview over derivatives, meaning the failure to prevent the disastrous swap positions accumulated by the likes of AIG also falls, in part anyway, at the CFTC's doorstep.
A Dow Jones news story contained a hilarious summary of Lukken's blase administrative style, in which he was described as having downplayed the whole being-a-stickler-for-rules aspect of regulation:
When Lukken headed the CFTC, he backed a more flexible, "principles-based" approach to regulation, different from what was seen as the prescriptive and "rule-based" methods employed by the Securities and Exchange Commission, which polices stock markets.
Obviously this kind of thing has been going on forever in Washington, but some revolving-door hires feel worse and more shameless than others, and this is one of those. But really it's the same old story: regulators keep falling down on the job, and keep getting rewarded for it by Wall Street, and nothing gets done about it.
Here is a link that might be useful: link