Tags: Doyle | regulation | Wall Street | JPMorgan

Larry Doyle Takes on Wall Street

By    |   Tuesday, 21 Jan 2014 06:38 AM

Former mortgage-backed securities trader Larry Doyle spoke recently at the law firm of Cuneo, Gilbert and LaDuca in Washington, D.C., about his book, In Bed With Wall Street: The conspiracy Crippling Our Global Economy.

After a long career on Wall Street, Doyle has decided to share what he has learned with the public, prompted by the response to his blog, which in turn led an author to suggest that he should write a book.

Doyle worked first for Larry Fink at First Boston, then for Bear Stearns and finally for JPMorgan Chase. The theme is that Wall Street puts making money ahead of serving the public. This is hardly front-page news, but the revelations about just how they do this are informative and infuriating.

As a starting point, the key question on Wall Street is always, what's your position? Doyle said that in a typical trading day, he might be asked that nine times. Now, based on the values he learned and his studies at Holy Cross, which he contends is the leading Jesuit university in the country, ahead of Georgetown, his "position" is "Pursue the truth, and unceasingly support your case." He might have added that the reason that must be done unceasingly is because the opponent, the Wall Street banks, is relentless.

Doyle defended the culture of Wall Street as one where reputation, based on friendships and relationships, is paramount, and he credited Kevin Finnerty of Bear Stearns for instilling high ethical standards and an understanding of risk at that firm. He asserted that the overwhelming majority of workers on Wall Street meet high ethical standards.

By the time he left JPMorgan in early 2006, Doyle recalled, he could already see cracks in the financial system. He said that he tried to interact with the blogosphere to determine, for the benefit of society, what happened in the financial system to cause 45 percent of credit to shut down in 2008, and he asked, where was the regulatory oversight?

He singled out Mary Schapiro, former chairman of the Securities and Exchange Commission (SEC), for engaging in "political theater," rather than regulation, and mused that he himself had not realized that the industry had suffered a decline in regulatory standards when the Financial Industry Regulatory Authority (FINRA), which Schapiro ran for a time, took over the NASD. He expressed astonishment that FINRA's 2007 annual report revealed that it maintained an internal portfolio, which would be a blatant conflict of interest. He cited Amerivest Securities and Standard Investment Charters as cases that did not receive appropriate attention from regulators.

Doyle praised his fellow author Bill Cohan as an "aggressive" critic from the sell-side perspective, and Gary Aguirre, a whistleblower at the SEC, as an example of someone who told the truth but was ignored and intimidated. Aguirre charged that the SEC decided not to take enforcement action against John Mack, CEO of Morgan Stanley, because of Mack's clout, as is often the case when reformers speak out against conflicts of interest and fraud on Wall Street.

Doyle's proposed solution is rather tepid. He charges that self-regulation has failed, so what is needed is "appropriate regulation, by real regulators, not captured by the industry." The halting "limplementation" of Dodd-Frank has demonstrated how difficult this is to achieve.

(Archived video can be found here.)

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Former mortgage-backed securities trader Larry Doyle spoke recently at the law firm of Cuneo, Gilbert and LaDuca in Washington, D.C., about his book, In Bed With Wall Street: The conspiracy Crippling Our Global Economy.
Doyle,regulation,Wall Street,JPMorgan
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2014-38-21
Tuesday, 21 Jan 2014 06:38 AM
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