Courtesy of Zero Hedge
There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.
For those who are unaware ISDA is a global OTC derivative lobby group, counting the world's largest investment banks among its members, and has frequently fought regulatory efforts to reform the market after the financial crisis. ISDA itself was exposed as a complete joke during the European crisis when due to the overhang of avoiding Europe's insolvent reality, it made CDS protection obsolete as protection from sovereign restructurings and credit events, in the process crushing one of the key ways to hedge for credit event risk.
A member of the U.S. Commodity Futures Trading Commission will become the new head of a bank lobby group that is fighting the derivatives regulator in court over a crucial new rule curtailing Wall Street.
The International Swaps and Derivatives Association said on Wednesday that Scott O'Malia, a Republican who often voted against new CFTC policy in the wake of the financial crisis, will become the trade group's next chief executive.
O'Malia will start his new job as of Aug. 18, ISDA said. The news came only days after O'Malia said he planned to leave the CFTC as of Aug. 8.
ISDA is one of three banking groups that sued the CFTC in December, hoping to beat back tough trading guidelines for U.S. companies doing business overseas, which they fear could hurt markets and cut profits.
The two sides are set to face each other in a first hearing in a federal court in Washington next week.
Even an otherwise impartial Reuters appears outraged by this blatant and painfully clear example of government capture of "public servants" by those who have dangle carrots of money in exchange for lobby (and future employment promise) favors, and thus set the rules, courtesy of people like O'Malia.
The speed of O'Malia's move, and ISDA's high profile, made the appointment striking even by Washington standards, where a 'revolving door' between regulators and those they oversee makes moves from one side to the other common.
"This is why Americans are so disgusted with so many high government officials and believe that Washington is in cahoots with Wall Street," said Dennis Kelleher, who heads Better Markets, a group urging tighter regulation of big banks.
O'Malia spent more than four years as a member of the CFTC, and was an outspoken critic of the rule-making process mandated by the 2010 Dodd-Frank financial reform law, which he said had been rushed, confused and lacked transparency. At the CFTC, he chaired the Technology Advisory Committee, which drives the agency's efforts to better cope with the vast amount of data it has to handle.
But wait, wasn't it that other former CFTC commissioner, Bart Chilton, who since has also departed for the far better paying confines of the private sector, who claimed every chance he got that it was the CFTC's "woefully small budget" that prevented it from analyzing the data it got? Apparently it turns out that the only reason for the CFTC's abysmal enforcement record is because the group in charge of processing said data was controlled by a coopted individual whose only prerogative was to cozy up to his future employer, ISDA, and not make any waves whatsoever.
