In an answer to critics who say the Occupy movement is unorganized and directionless, Occupy the SEC has formed. In a 325 page letter it outlines changes needed to the Volcker Rule. But, as Felix Salmon points out, even if those demands are met, they mean nothing if regulators fail to enforce changes.
I'm Felix salmon and I'm here with -- the FCC or at least. What we seven foot from the this in general. Is that this day that. That -- in twenty crowd in the private equity rout that hedge fund crowd they have this this wonderful and magical. Carried interest which it explains why. Mitt Romney paid less than 15% tax on his income for the policy is. What is the connection between. Mitt Romney's tax rate and. The -- Carried entrances and ownership. In a vocal rule here interest is by definition not an ownership interest. And the reason that we find that problematic is the vocalist supposed to say. You can -- hedge funds or private equity funds unless you only own up to 3% of an individual behind. Or all of your investments together are less than 3% of this bank's tier one capital carried interest doesn't count towards that 3%. So there's this nice like I can have my -- needed to when it comes to taxation. This is an ownership interest in and I get to gain tax to 15%. But when it comes to the vocal rule it's not a ownership interest and so I get to have more ownership thing and receive more benefits from this fund. And so we don't think that the banking entities in these covered funds should get these benefits and both the round of taxation and the -- regulation. Even if the Volcker Rule is tightened. In accordance with -- every single woman -- suggestions so long as it's not. Enforced by the regulator is. You haven't really achieved very. That's the risk there Shapiro from the SEC. Went on record to say that we're not interested. And now punishing any well intentioned breaches of market making we take exception to that we mentioned in the letter because. The statute does not say that you know there's a good faith exception. To the rule doesn't say that there's a well intentioned exception to a rule that says this of the rule. And whether you have good intentions or not. You have to comply. And you know that statement by the SEC had. Was problematic because it shows again lax regulatory posture towards enforcement. I think of to a large part of the reason why the agencies have been in the pocket. Of the banks. Is because of the regulatory process itself there's an inordinate amount of lobbying that goes on. The -- on the -- administrative procedures act. Any agency that creates a substantive regulation have to take public comment and consideration. Before finalizing its rule. Now the only parties that ever respond on the other entities that are actually affected by rule and I think that explains to a large extent. Why a lot of the agency regulations and of being pro bank because the banks that respond -- that blog that's it we'll visit an artist and -- -- accordingly. If there was that countervailing voice. I think the equation can be different I think that the agencies could end up having strong regulation that's what we. Into -- to some extent. You just -- in this incredibly sophisticated language. Let's is 325. Pages of extremely. Dense and tight part of which most people and now beginning to understand. Is this the point of which. Occupy it has ceased being a genuine popular movement and is now like getting really sort of the Kevorkian out of the out of the region -- most of us. Well it's about using the tools at your disposal. So I don't think -- inconsistent with any other group with a not -- -- street. I think that there was a -- -- occupied try to use some of the regulatory tools and prophecies. For democratic change that exists within our current system. And so that's not to say that -- -- protest strike action in the place they certainly do. They're not inconsistent with -- approach that speaks the language of the regulators speak tries to put pressure on the regulators in the way that they know. And that that'll work on them. Yeah newness.