Now THAT’S a Retirement Speech!

In the wake of the Great Recession, the SEC has come in for plenty of criticism from academics and pundits who follow financial regulation. But few critiques have been as blunt and biting as the one recently issued by a retiring SEC lawyer.

James Kidney had joined the SEC in 1986. He made a speech at his retirement party last month that has garnered considerable attention, not least because his audience was composed primarily of SEC lawyers and alumni.

Kidney had campaigned within the agency to bring charges against more executives, especially in the SEC’s  case against Goldman Sachs Group Inc. (GS)

According to a copy of his remarks that found its way to Bloomberg News, Kidney said the SEC had become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”

“I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.” 

Kidney’s remarks serve as a reminder that no senior executive at a major financial firm has gone to jail; for that matter, the SEC has brought civil charges against only a handful. 

The revolving door between government agencies and those they are supposed to be regulating is an open secret–and a clear impediment to vigorous enforcement of the laws.

Sometimes, it takes an inside guy to remind us outside folks why things aren’t working the way they should.


  1. Kidney points out the problems with the agency from within. Wouldn’t a reasonable person expect a few congressmen or senators to jump all over this? Set up hearings and root out the problems and make sure that those running the SEC are committed to the agency’s mission? Where are those voices?

  2. I think there is a simple answer to daleb’s suggestion—almost all the legislators are also auditioning for their next job; think after term limits how much worse it will be.

  3. Those who have eyes on the next rung of the ladder are not interested in cutting off any part of the ladder (or hurting their future careers).

  4. @Pat: Barney Frank is ‘da man’ for that! I wish there were more like him!

  5. From an article on Wall Street on Parade – – Any hope that President Obama would demonstrate a breath of fresh air by making independent appointments to the SEC and in cleaning up Wall Street were dashed to shreds with the appointment of Mary Jo White as SEC Chair early last year. White has now spun through the revolving door four times in 36 years, always returning to her corporate law firm, Debevoise & Plimpton. Between herself and her husband, John W. White, of corporate law firm Cravath, Swaine & Moore LLP, they or their law firms have represented every major Wall Street mega bank. –

    Direction and leadership starts at the top, in this case Obama. I have been a part of working class for about 40 years. The leader sets the tone. Thus, we have Watergate, Iran-Contra, WMD lies, Bridge Gate, and Too Big to Fail Too Big to Jail.

    Occupy Wall Street protester Cecily McMillan, faces Seven Years in prison for allegedly elbowing a cop in the eye during a protest.

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