Why the S.E.C. Didn’t Hit Goldman Sachs Harder [...]

In our conversations, Kidney reflected on why that might be. The oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role. But to Kidney, the driving force was something subtler. Over the course of three decades, the concept of the government as an active player had been tarnished in the minds of the public and the civil servants working inside the agency. In his view, regulatory capture is a psychological process in which officials become increasingly gun shy in the face of criticism from their bosses, Congress, and the industry the agency is supposed to oversee. Leads aren’t pursued. Cases are never opened. Wall Street executives are not forced to explain their actions.

Kidney still rues the Goldman case as a missed chance to learn the lessons of the financial crisis. “The answers to unasked questions are now lost to history as well as to law enforcement,” he said. “It is a shame.” (Source)

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