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Joseph Stiglitz Blocked From SEC Panel For Criticizing Wall Street

Nobel-prize winning economist and former Chief Economist of the World Bank Joseph Stiglitz was blocked from an SEC advisory panel for his critical views of Wall Street according to to a report from Bloomberg News. Apparently voicing any criticism of how Wall Street operates disqualifies any expert, no matter their credentials, from advising government regulators.

In the years after the 2008 financial crisis Stiglitz has dialed up his criticism of Wall Street’s business practices labeling many of them as “rent-seeking” and has highlighted increasing inequality in America as serious problem. He also helped popularize the the 1% vs 99% frame with his widely read Vanity Fair article Of the 1%, by the 1%, for the 1%.

Despite his clear opposition to current practices he has always leveled this criticism in a respectful way utilizing his expertise and avoiding personal invective. No matter, as the new standard appears to be that any criticism of Wall Street, regardless of how well sourced and grounded in the facts, is not acceptable if one wishes to serve in government.

The reported straw that broke the camel’s back was Stiglitz’s criticism of the dubious practice known as high-frequency trading (HFT). HFT has come under criticism from all sort of places including on Wall Street for shady trading practices, offering no overall economic benefit, and causing instability in the financial markets. Stiglitz said it was worth considering the option of putting a tax on HFT which was not well received by HFT industry apparatchiks in DC.

Stiglitz’s rejection shows the partisan infighting that has bogged down Securities and Exchange Commission Chair Mary Jo White’s plan to set up a panel of experts to advise the agency on topics ranging from rapid-fire stock trading to dark pools.

Republican Commissioner Daniel Gallagher opposed Stiglitz’s nomination in recent weeks as White sought to complete the list of participants, according to two people who asked to not be identified because the deliberations were private. Democratic Commissioner Luis Aguilar had pushed for Stiglitz, who has said high-frequency trading isn’t good for financial markets and should be curbed, possibly through a tax.

Stiglitz has his own theory on why he was considered unworthy of service. In an interview with Bloomberg he said “I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry.”

If Stiglitz’s analysis is correct and the real qualification for government service is being owned by the industry then regulators will only be advised by pro-Wall Street hacks who will, once again, push regulators to let Wall Street take reckless myopic risks. We know how that story ends.

Photo by JSquish under Creative Commons license.

CommunityThe Bullpen

Joseph Stiglitz Blocked From SEC Panel For Criticizing Wall Street

Nobel-prize winning economist and former Chief Economist of the World Bank Joseph Stiglitz was blocked from an SEC advisory panel for his critical views of Wall Street according to to a report from Bloomberg News. Apparently voicing any criticism of how Wall Street operates disqualifies any expert, no matter their credentials, from advising government regulators.

In the years after the 2008 financial crisis Stiglitz has dialed up his criticism of Wall Street’s business practices labeling many of them as “rent-seeking” and has highlighted increasing inequality in America as serious problem. He also helped popularize the the 1% vs 99% frame with his widely read Vanity Fair article Of the 1%, by the 1%, for the 1%.

Despite his clear opposition to current practices he has always leveled this criticism in a respectful way utilizing his expertise and avoiding personal invective. No matter, as the new standard appears to be that any criticism of Wall Street, regardless of how well sourced and grounded in the facts, is not acceptable if one wishes to serve in government.

The reported straw that broke the camel’s back was Stiglitz’s criticism of the dubious practice known as high-frequency trading (HFT). HFT has come under criticism from all sort of places including on Wall Street for shady trading practices, offering no overall economic benefit, and causing instability in the financial markets. Stiglitz said it was worth considering the option of putting a tax on HFT which was not well received by HFT industry apparatchiks in DC.

Stiglitz’s rejection shows the partisan infighting that has bogged down Securities and Exchange Commission Chair Mary Jo White’s plan to set up a panel of experts to advise the agency on topics ranging from rapid-fire stock trading to dark pools.

Republican Commissioner Daniel Gallagher opposed Stiglitz’s nomination in recent weeks as White sought to complete the list of participants, according to two people who asked to not be identified because the deliberations were private. Democratic Commissioner Luis Aguilar had pushed for Stiglitz, who has said high-frequency trading isn’t good for financial markets and should be curbed, possibly through a tax.

Stiglitz has his own theory on why he was considered unworthy of service. In an interview with Bloomberg he said “I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry.”

If Stiglitz’s analysis is correct and the real qualification for government service is being owned by the industry then regulators will only be advised by pro-Wall Street hacks who will, once again, push regulators to let Wall Street take reckless myopic risks. We know how that story ends.

Photo by JSquish under Creative Commons license.

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Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.