Insiders And Incest In Finance: How Do You Regulate Banksters When Ex-Regulators Go To Work For Alleged Banksters?

Then Annette Nazareth stepped in. That Sunday morning, she e-mailed a dozen Securities and Exchange Commission officials about the bill that would become the 2,300-page Dodd-Frank Act.

Nazareth, herself a former SEC commissioner, represents the biggest banks and securities firms as a partner in the Washington office of Davis Polk & Wardwell LLP. She attached an annotated copy of the measure to her June 27, 2010, e-mail, marking changes made during the wee hours. It could be an invaluable tool for an agency hard-pressed to analyze the bill on a tight deadline.

“In case you would find it helpful,” Nazareth wrote to the group, many of them ex-colleagues.

Two hours later, SEC Chairman Mary Schapiro responded: “Thanks. We have our work cut out for us.”

Dodd-Frank, which took effect in July 2010, would shape the SEC’s agenda for the next two years as it labored to write some 100 regulations the law required. It also opened opportunities for Nazareth. With her connections and longtime SEC experience, she emerged as the preeminent legal advocate for financial services firms as they sought to scale back the new rules.

With Nazareth on board, Davis Polk was hired as outside counsel on Dodd-Frank by the six largest U.S. banks and the Securities Industry and Financial Markets Association, the Wall Street trade group, according to the law firm’s website. The firm also performed work for foreign lenders including Credit Suisse Group AG (CS) and Deutsche Bank AG.

Friendly E-Mails

Nazareth’s e-mails to Schapiro and then-SEC General Counsel and Senior Policy DirectorDavid Becker, obtained through a Freedom of Information Act request filed by Bloomberg News, demonstrate how lobbyists and lawyers draw on bonds they formed in government service to gain access for clients, and how they work to maintain those ties.

It’s “a real advantage” to send a familiar face into the agency, said Adam Pritchard, a University of Michigan law professor and ex-SEC lawyer. “If I’m a client, I’m very pleased. I’m willing to pay top dollar for that.”

Rather than making specific policy requests, Nazareth’s messages asked for meetings, offered her firm’s products and opined on the debate in Congress. She told Becker the prospect of a consumer finance protection agency made her “feel ill” and that she’d asked Sifma, the Wall Street trade group, to “trash” a proposal for an investor advocacy office at the SEC. READ MORE HERE