The conventional wisdom is that the Securities and Exchange Commission is a good thing. The SEC, like much of government regulation, convinces people to be complacent. They trust that the SEC insulates them from unsavory characters, but it actually enables predators, by its very existence. In the eighty years since the SEC, the premium on integrity (cherished in a free society) has been and continues to be devalued, as gullible constituents assume the government has auditioned and validated investment advisers, stock brokers, stock offerings, and all the rest. You know the routine — all the phony shareholder elections and useless proxy statements, against a façade of corporate governance.
Three generations of investors have been screwed, and repeatedly. Still, it would be hard to convince liberals that we would be better off without the SEC, especially in the Internet Age when the private sector would provide real-time information to better enable competition, unhindered by government cronyism and favoritism, and thus would properly incentivize and reward the honest and competent purveyors of due diligence.
Contrary to political mythology, Republican voters are not enamored of Wall Street. They feel victimized by what the legions of brokers earn, and the mega-bucks accruing to Goldman Sachs partners, while their own 401Ks and IRA’s are lethargic, or go up and down the roller coaster, with insufficient returns a decade later. In this year’s election Wall Street is the sleeper issue, the symbol of the rigged economy that both Bernie Sanders and Donald Trump decry. Ted Cruz has been talking about how he is a constitutional conservative, Marco Rubio about how he owes student debt and is thus relevant for the 21st century, and John Kasich about the need to return Federal power back to the states and localities. They should have been talking about the Main Street revolt against Wall Street and multi-nationalism, Wall Street and the declining middle class. In this 2016 revolt of the masses, Hillary is suspect, as a conspirator and Donald is not, as a rebel.
President Franklin D. Roosevelt selected Joseph P. Kennedy, 46, as the founding chairman of the SEC. Joe Kennedy’s son, John F. Kennedy, would in 1960 be elected the 35th president of the United States. Joe Kennedy was a notorious Wall Street manipulator, engaged in all sorts of scams in the 1920s, while he bailed before the 1929 crash. Asked in 1934, right after the SEC began operations, why he had just selected this crook to oversee Wall Street, FDR replied, “Takes one to catch one.”
At the debate a week ago a rambunctious Marco Rubio called Donald Trump “a con man.” In fact, Trump has not been charged with fraud. He is known as shrewd, tough, and aggressive in business, but not as dishonest. But Rubio and Cruz last week went beyond the matter of Trump University; they also were metaphorical, i.e., that Trump was “conning” conservatives. Then, and the next day, Rubio and Trump engaged in an unproductive discussion about hand size, encouraging speculation about provocative correlations. While voters have seen Trump’s insults as continuing evidence of strength, they saw Rubio’s invectives as weakness, even desperation. On the campaign stump Rubio had morphed into an unlikely Don Rickles. Rubio, once the symbol of the Reagan renaissance, saw a precipitous drop in his poll numbers. Even Republican debate aficionados began to tire of the overall incivility, while Hillary Clinton, Bernie Sanders, DNC Chair Wasserman Schultz celebrated last week’s Republican R-rated debate as unfit for children.
Last night the Republican brand was not dishonored. While all four candidates did well, Trump did the best because he likely retained his lead. He was attacked for some of the very positions that endear him to many Republican voters. For example, he is criticized by pundits for saying, “We have to get to the bottom of why there is Muslim hatred of us.” The opponents sounded like they were quibbling with him. At one point when an articulate Rubio criticized Trump for saying he would be “neutral” between Israel and the Palestinian Authority to effect a deal, Rubio softened his critique by saying Trump surely did not want to hurt Israel.
Trump’s own supporters have been hoping that at long last Trump would act like the frontrunner, and last night he did. That’s because Trump now is in self-fulfilling prophecy stage, pushing for party unity because that’s what you want when you think you’re going to be the party’s nominee. Even when he entered the stage, Trump seemed a different man, mellow. In past debates his cordiality at the outset seemed forced, because he knew he would go for the jugular. But last night he was comfortable in his cordiality, because he knew he would hold back. He correctly anticipated his opponents would not attack him personally.
Trump’s strategy last night, and generally, now, is to run the clock, because in the continuing primaries, time seems to be on his side.
Showing the self-discipline that he supposedly lacked, Trump barely “counter-punched.” There was no more “Lyin’ Ted” or “Little Marco.” On several occasions Trump, under attack mainly from Cruz, turned the other cheek. An adult, probably not someone in Trump’s campaign, had been able to penetrate Trump’s inexperienced inner circle and reason with the novice candidate. There was something else new in this debate. It’s the first time Trump was briefed and the first time he prepared. As he outlined in The Art of the Deal, he now was preparing to close the deal. We’ll know a lot more next week, after Florida and Ohio.
The discipline was obvious because both Trump’s opening statement and his closing statement bookended his theme — “The Republican party has a great chance to embrace millions of people that it has never known before… we should seize that opportunity.” Before the debate started, RNC Chair Reince Priebus articulated a similar unity theme.
Cruz and Rubio confined negative references about the frontrunner to disagreements about issues. The prior week their frontal attack was on Trump’s character. Last night they questioned Trump’s lack of specificity on issues. Even with his briefing, Trump was no match on specifics with Cruz and Rubio, but these debates are not judged by forensic judges with scorecards. Here’s the reality: unless Rubio wins Florida and Kasich wins Ohio, Trump could win on the first ballot. And even if he comes close, party unity might give him the nomination in an open convention. But he needs more than a bare plurality, rather one approaching a majority of delegate votes.
Trump likely has been briefed on the Republican Party’s convention rules. Without getting into the details, these rules were designed to favor an Establishment candidate against volatile insurgents. But by a twist in fate, they — along with the primary calendar with upcoming winner-take-all primaries — favor the current front-runner who is the very insurgent party bosses feared.
We don’t know how Trump would have reacted last night to a new round of attacks on his character. There was no mention of Trump’s four bankruptcies (they were bankruptcy reorganizations of discrete entities), Trump University (the jury literally is out), eminent domain to seize an old lady’s house for the parking lot (that was never built). The closest Ted Cruz came to all this was raising the specter of Trump’s repeated contributions to the campaigns of liberal Democrats, an attack Trump has deflected with this defense: I was a pragmatic, expedient, greedy businessman; I got along with everyone, and I gave to politicians that are good for my business; indeed, I was a Bad Guy until I declared my candidacy and gave up my wicked ways.
This remains an ingenious and effective narrative. What’s more, it just may be true.
Ted Cruz said that he can uniquely take on the “Washington cartel.” He lectured the uncharacteristically docile Trump about the largesse Trump had provided to the campaigns of John Kerry, Hillary Clinton, and so many other Democrats, and even the “Republican Establishment.” Why, then, viewers must wonder, is this elite arrayed against Trump? Perhaps because Trump has defected from The System (as Ted Cruz calls it, saying that “Donald is part of the corruption… When has he stood up to Washington?… When has he stood up to the lobbyists?”). Trump now says he leads the rebellion.
Which brings us back to Joe Kennedy, the stock manipulator FDR confidently picked as the founding chair of the SEC. Donald Trump says about The Establishment of special interests and their lobbyists, that because he knows how to work the system, he can confront it.
“Donald told you he has been sitting at that table to buy influence,” Sen. Cruz exclaimed and rhetorically asked, with skepticism: “Suddenly he will change?”
The answer seems to be yes.