Live-blogging the Goldman Hearing

BY newsdesk  April 27, 2010 at 5:49 PM EDT

The Rundown is following the congressional subcommittee hearing on Goldman Sachs Tuesday and offering updates and insights from the NewsHour news desk and economics correspondent Paul Solman, as well as frequent NewsHour guest Simon Johnson and smart commentary from around the web.

Update: 8:44 PM EST

Nearly 11 hours after it began, the subcommittee hearing on Goldman and the financial crisis comes to a close, and on something of a tense note. Levin said he didn’t appreciate Goldman representatives telling the press that emails had been cherry-picked by the subcommittee to make the firm look bad. Levin, in closing, tells Blankfein that the 900-page evidence book in front of him was “a whole bowl of cherries.” Levin was certainly Blankfein’s toughest interrogator today.

Update: 8:30 PM EST

Levin, citing Blankfein’s deposition with the subcommittee staff, questions Blankfein about the importance of rating agencies. Blankfein says it wasn’t within his scope to think about how important AAA ratings were to investors or whether some investors might be barred from investing in anything but the best-rated securities. Levin is, it is fair to say, skeptical.

Update: 8:13 PM EST

Sen. Levin appears to be undeterred by the relatively late hour for the hearing, hammering away at Blankfein about taxpayer money that flowed through AIG to Goldman and later taking him to task for “selling things you didn’t believe in.”

Update: 7:42 PM EST

Sen Tester asks: Do you on behalf of Goldman take any responsibility for the collapse of 2008?

Blankfein: Yes.

Tester: Was it embarrassing that Goldman was bailed out?

Blankfein: “It was an embarrassing situation then and it’s an embarrassing situation now.”

Tester: Does Goldman owe anything to taxpayers for bailout?

Blankfein: “Yes. And for many other reasons.” But they were not waiting for a government bailout, Blankfein insists, citing as evidence for the firm’s viability the $5 billion deal it cut with billionaire investor Warren Buffett in the weeks before the bailout. Buffett wouldn’t have invested, Blankfein says, if he didn’t think he’d make money on us.

Update: 7:31 PM EST

Hearing is still going, despite earlier reports that Blankfein would only appear for an hour. Blankfein, in response to questions from Sen. Tester: “The securities weren’t meant to fail. They succeeded by conveying the risk.”

Update: 6:43 PM EST

Sen. Coburn asks Blankfein why Goldman Sachs decided to release trader Fabrice Tourre’s emails over the weekend, including personal ones to his girlfriend.

Blankfein looks uncomfortable and stammers a bit. “I wasn’t close to the decision,” he says, but argues that since some emails had already been released, Goldman was just catching up with other media coverage and weighing in on business issues other emails raised.

Coburn: “The tone set by that…if I worked for Goldman Sachs, I’d be worried.”

Update: 6:42 PM EST

Simon Johnson blogs over at Baseline Scenario: Three Modest Proposals for Goldman. In brief: “Goldman Sachs’ public relations people must be feeling more than a little down….In the interests of finding a more positive and cooperative way forward, here are three suggestions for the PR team to take up with senior management – once they are in mood to think long-term about their “franchise value” again.”

Update: 6:28 PM EST

Blankfein says he is “generally supportive” of the financial reform legislation currently in the Senate. He says “financial reform is essential” and that when he attended Pres. Obama’s speech last week at NYC’s Cooper Union, he agreed with Obama’s statement that the biggest beneficiaries of reform will be Wall Street, because Blankfein says, “the biggest risks financial institutions have are with each other.”

Update: 6:24 PM EST

Blankfein outlasts the protesters. Via the NYT’s Louise Story, who is in the hearing room, Code Pink protesters just left as the hearing nears the 8.5-hour mark.

Update: 6:04 PM EST

Sen. Kaufman asks if Goldman’s proprietary trading — trading for its own account, as opposed to for clients — ever runs counter to the interests of clients. Blankfein argues that they keep those activities separate and that he doesn’t think so. Kaufman follows up by suggesting that, since the activities are still under the roof of one firm, couldn’t that create the possibility of conflicts. Blankfein: “We always have to manage conflicts.”

Update: 5:46 PM EST

Sen. McCain: “You’ve recovered rather nicely” after receiving $10 billion in TARP funds. Blankfein says he doesn’t know the exact figure of Goldman’s profits. McCain asks him about his bonus last year. Blankfein hesitates before saying, “About $9 million.”

Update: 5:32 PM EST

Sen. Levin and Blankfein have a spirited, if testy exchange, about the true meaning of market-making. Blankfein argues that Goldman offers clients the exposure they want; Levin pushes on whether Goldman needs to disclose whether it is taking the short position on securities it is selling.

Update: 5:16 PM EST

CEO Blankfein, in his opening statement, opens with Goldman’s positives:

We held the government’s investment [in Goldman] for approximately eight months and repaid it in full along with a 23% annualized return for taxpayers….The 35,000 people who work at Goldman Sachs, the majority of whom work in the United States, are hard-working, diligent and thoughtful. Through them, we help governments raise capital to fund schools and roads. We advise companies and provide them funds to invest in their growth. We work with pension funds, labor unions and university endowments to help build and secure their assets for generations to come. And, we connect buyers and sellers in the securities markets, contributing to the liquidity and vitality of our financial system. These functions are important to economic growth and job creation.

Update: 5:15 PM EST

Viniar tells Sen. Coburn that he believes the proposed Volcker rule will make U.S. financial firms less competitive and weaker than their international counterparts.

Viniar and Broderick were then excused. Finally, seven hours and change after the hearing began, Blankfein takes a seat at the witness table.

Update: 5:05 PM EST

According to the NYT’s Louise Story, who is live-blogging from the hearing room, Lloyd Blankfein has entered the room, suggesting that the subcommittee will indeed hear from the Goldman CEO before day’s end.

Update: 4:57 PM EST

Sen. Coburn asks Viniar what kind of ethics are discussed at Goldman when someone is hired. Viniar says that everyone receives Goldman’s 14 business principles, which he says “we live by.” Read the principles here.

Sen. Coburn then asks Viniar if he thinks it was ethical for Goldman to release Fabrice Tourre’s emails. Viniar: “I have no view. I don’t think it was unethical.”

Update: 4:48 PM EST

Viniar and Broderick are back. Just before the break, a revealing exchange: Sen. Levin asked Viniar how he felt that the firm was selling financial products described by the firm’s own employees as “sh*tty” (which Deal Journal is putting as Levin’s 12th use of the term today).

Viniar: I think it is unfortunate that it was said in an email.

He then said it was unfortunate it was thought at all.

Update 4:43 PM EST

Another 10-minute break. Next up, CEO Lloyd Blankfein. Strike that: Viniar and Broderick still in the hot seat.

Update: 4:29 PM EST

Sen. Ensign just asked Viniar if he’s familiar with The Big Short, Michael Lewis’ latest book about the financial crisis. Viniar says he hasn’t read it. Lewis recently spoke to the NewsHour’s Jeff Brown about the people who made a killing on the world of mortgage-backed securities and complex derivatives.

Update: 4:02 PM EST

Chairman Levin leads off the second panel with questions for Viniar about Goldman’s short bets. These bets against the housing market allowed Goldman to make money as the market tumbled in 2007 (Levin: “So, the big short saved your rear end.”). Viniar emphasizes that Goldman had so many short bets only to hedge against its equally heavy volume of long bets.

Update: 3:41 PM EST

Up next is chief risk officer Craig Broderick. He says: “Particularly in light of events of the last two years, it’s clear that no approach to risk management was foolproof, and we have all learned valuable lessons from recent experiences. However, we believe that the core elements that make up our risk management framework were broadly effective despite the unprecedented turmoil in the markets.”

Update: 3:31 PM EST

And…they’re back. CFO Viniar, in his opening statement: “For Goldman Sachs, weathering the mortgage market meltdown had nothing to do with prescience or betting on – or against – anything. More mundanely, it had everything to do with systematically marking our positions to market, paying attention to what those marks were telling us, and maintaining a disciplined approach to risk management.”

Update: 3:17 PM EST

The subcommittee just took the day’s first break — 10 minutes. When they reconvene, committee members will hear from David Viniar, Goldman’s chief financial officer, and Craig Broderick, the firm’s chief risk officer.

Until then, the Wall Street Journal’s Deal Journal offers up its take on winners and losers so far today:

Fab Tourre was bright and breezy and forceful in defending his role. His only weak moment was when Sen. Coburn suggested Goldman might be about to throw him under the bus. Sparks was cool under pressure, but he may be perceived as evasive and showing no remorse. As other financial crisis hearings have shown, the public and the press are looking for that “I am sorry” moment. Sparks wasn’t serving it. Levin started out the hearing with a rambling line of questioning, but he got some good one liners when he had another crack at Sparks. Sen. Pryor probably asked the most thoughtful questions of the four witnesses and he got the answers that will likely make headlines. Goldman execs felt they did nothing wrong.

Update: 2:57 PM EST

Nearly five hours into the hearing and the first panel is still in the hot seat. Still to come on the second panel: Goldman CFO David Viniar and chief risk officer Craig Broderick. Only after that will the subcommittee get to Goldman CEO Lloyd Blankfein.

Update: 2:14 PM EST

For more on the Goldman emails at the heart of so many questions today, Louise Story of the NYT spoke with Ray Suarez on the NewsHour Monday night. She explains which emails are new and noteworthy and how both the government and the company released internal Goldman emails to support their versions of the story.

Update: 1:53 PM EST

Felix Salmon on the hearings thus far:

[I]n the actual hearings, the members of the Goldman mortgage desk are looking decidedly weak. They don’t answer questions, they keep on asking to double-check documents to run down the clock, they give narrow and unhelpful answers, and they generally act in a slippery and unsympathetic manner. Interestingly, Fabrice Tourre is the most straightforward and cogent of the lot.

I can see why it’s working out this way: the Goldman team has been briefed by their lawyers to be very careful about what they say, while the Senators are interested in grandstanding and scoring points.

Update 1:39 PM EST

Nevada’s Sen. John Ensign finished up his questions by hitting on a topic that has helped drive much of the public’s anger toward Wall Street: bonuses. Simply put, he asked, does Wall Street’s bonus system encourage ethical behavior?

Each of the four witnesses agreed that contrary to public opinion, Wall Street’s incentives structure has helped keep them honest. If you weren’t cognizant of ethics at Goldman, Birnbaum said, “you’d probably be fired.”

Update: 1:22 PM EST

Sen. Mark Pryor of Arkansas asks whether Goldman brokers have a responsibility to disclose potential conflicts of interest to clients. The larger point: Why Wall Street does not make use of industry-wide ethical standards, much like attorneys or CPAs do.

Sparks replied: “If we can do harm to [clients], the answer is absolutely [that conflicts should be disclosed].”

Update: 1:12 PM EST

SIMON JOHNSON: Mr. Swenson has sympathy but no regrets.

Sen. Pryor: Did Goldman Sachs contribute to the downturn we experienced in 2008?

Mr. Swenson: “I haven’t thought about that specifically”

He may be the only American who hasn’t thought about that question.

Update: 12:51 PM EST

SIMON JOHNSON: Now the temperature has been turned up. Sen.Claire McCaskill: “Was anyone else in the room other than Paulson?” She is fired up and really going after Mr. Tourre; she must be a former prosecutor (or maybe a future attorney general).

Mr. Sparks just stepped in to disrupt the flow against Mr. Tourre. Nicely done by Mr. Sparks. But the Senator has found her stride again.

Sen. McCaskill thinks Goldman was running a casino (which she is not taking issue with), while skewing the odds against some players (which she thinks is a very big problem).

The documentation here is clearly voluminous. Everyone seems to be losing track slightly. The complexity surely favors the defendant in a case like this.

Update: 12:41 PM EST

SIMON JOHNSON: Sen. Tom Coburn pressed Michael Swenson hard on what Goldman did and why. He picked up on some points made by Sen. Kaufman, regarding securities that originated with “Long Beach”. Rare to see this level of bipartisan piling on.

Sen. Coburn just asked Fabrice Tourre, “How many Goldman lawyers talked to you before this hearing?” Mr. Tourre: “I don’t remember.”

Sen. Coburn also established that Mr. Tourre’s legal advice is being paid for by Goldman. And Goldman also released emails “embarrassing” to Mr. Tourre. This is a deep game.

Update: 12:34 PM EST

Here’s all 901 pages of today’s hearing book with all e-mails being referenced by the panel.

Update: 12:24 PM EST

In Tuesday’s WSJ, Dennis Berman argues that Goldman trader Fabrice Tourre is “no villain.” In fact, Berman writes, “there’s reason to find him an unwitting hero of the public conscience, despite whatever efforts are made by a camera-hungry row of senators Tuesday.”

Tourre’s emails — some to his girlfriend, along with those by other Goldman traders and executives, are on full display in today’s hearing, being used by lawmakers to try to illustrate that Goldman made huge profits betting against the housing market.

But the WSJ’s Berman has this take:

Mr. Tourre’s emails are both unrepentant and self-mocking. But through it all, he raises the uncomfortable question faced by Wall Street in this mounting regulatory debate: the need to convince a skeptical public that its work has social value. By comparison, the emails of Goldman’s top executives show little of Mr. Tourre’s skepticism.

After reading Berman’s column, Paul Solman had this to say:

PAUL SOLMAN: I’d have to see Fabrice Tourre’s entire email output to his girlfriend to get a sense of his real attitude. “Hero” seems a bit strong, given what’s printed in the Journal. And to expand a bit on a recent post here, a lot of the Wall Street folks I’ve known had an ironic take on what they were doing. The message for us all? Don’t write emails you don’t want the world to read.

Update: 12:16 PM EST

PAUL SOLMAN: Oklahoma Republican Sen. Tom Coburn just said, by the by, that Congress is going to pass a financial regulation bill. He would know.

Update: 12:07 PM EST

SIMON JOHNSON: Senator Ted Kaufman is pressing Goldman on their responsibility for the underlying misrepresentation in high-risk mortgages.

Mr. Daniel Sparks, formerly of Goldman, seems out of his depth and rather flustered.

Senator Kaufman is telling Goldman about the composition of the securities they were selling. Mr. Sparks apparently did not know that 90 percent of home equity loans in a particular “product” put out by Goldman were based on stated income, i.e., so-called “liar loans”. The implication is clear: Either Goldman executives did not know what was going on or really didn’t care.

The Goldman replies so far always involve some version of “sure, with hindsight”; Senator Kaufman is pushing back on this very directly. He’s all about what reasonable people should have thought was responsible and fair.

Senator Kaufman just said: “Don’t do the hindsight thing with me, come on.”

Update: 12:03 PM EST

PAUL SOLMAN: Sen. Collins was just grilling “Fab Fab” and accusing him (and his fellow testifiers) of stalling to run out the clock on the hearing. The email in question is one in which Tourre says Goldman should sell to less sophisticated clients because there’s more profit than in working with hedge funds. He says it’s because hedge funds are such tough bargainers on fees, not because they’re more sophisticated. Collins doesn’t believe him.

I have to say, I’d hate to be up there, trying to defend emails from a stack of documents the size of Webster’s unabridged dictionary — and then some. On the other hand, if I hadn’t been a Wall Street trader, I would have been able to answer the key question: No, it wouldn’t be right to sell investments that I was betting against without letting the buyer know. Not one of the traders has been willing to say as much. Instead, they really seem to believe that as “market makers” dealing with “sophisticated investors,” they had no moral responsibility other than to sell what others would buy. Only one trader — Josh Birnbaum — seems to think that Wall Street SHOULD have a fiduciary responsibility to look out for the interests of its clients and that maybe that should be put into law.

Now let me pause here and say something from personal experience: I’ve known a lot of investment bankers over the decades. Almost none of them, while they were on Wall Street, were especially concerned with the long-term interests of their clients. They were DEAL-makers who cared more about making money than any other group of people I’ve ever met. The Goldman testifiers seem, in that sense, awfully familiar. To put it carefully, Wall St. is not a place where moral introspection dominates, near as I could ever tell. I’d guess the hearings are making that seem pretty clear to anyone watching.

Update 11:56 AM EST

One of the big questions heading into today’s hearing was how Goldman would defend itself throughout the day. Senators Collins and Levin seem to think Goldman’s strategy is to stall as much as possible until the clock runs out. But as Levin just told panel No. 1: “We’re going to stay here as long as it takes to get this information.”

Update: 11:54 AM EST

SIMON JOHNSON: Senator Susan Collins is becoming increasingly irritated with the Goldman witnesses. She feels they are being evasive and even trying to run out the clock.

This matters because remember that the Democrats need at least one – and perhaps only one – Republican Senator in order to open debate on the Dodd financial bill (and to pass a bill in the end).

Senator Collins seems to be in complete agreement with Senator Levin on the central issue today – Goldman had a “big short” on housing, while it was also selling mortgage-backed securities (and derivatives thereof) to people who had significant long positions

I have no idea if she could prove this in open court – or how much this would help the SEC case (which is about nondisclosure, so it’s related but very much in the legal weeds). But this is not the important issue at stake today – the question is whether Goldman behaved badly vis-à-vis its clients and the system. It’s fairly clear where Senator Collins comes out on this.

Update: 11:46 AM EST

Sen. Susan Collins wants to know if Goldman has a duty to act in the best interests of its clients.

Daniel Sparks says: “I believe we have a duty to serve our clients well.”

Joshua Birnbaum: “Not only do I believe that we do, I believe that we did.”

Fabrice Tourre: “We have a duty to serve our clients by showing prices on transactions they ask prices for.”

Update: 11:40 AM EST

Levin was just on the warpath about Goldman going short on the mortgage market ahead of the housing meltdown. But as Felix Salmon points out:

“If you have a substantial position in mortgages — and pretty much all banks had a substantial long position in mortgages come 2007 — then prudent risk management dictates that you try to hedge that position by selling what you can and putting on shorts in order to hedge what you can’t sell. What’s more, if you’re Goldman Sachs and you see the market going down, you’re going to be aggressive when it comes to putting on those short positions. That’s Wall Street.”

Update: 11:38 AM EST

PAUL SOLMAN: Moments ago, Levin focused on a deal I haven’t heard about before, where Goldman sold a batch of lousy housing loans which the firm itself was betting against, without telling its clients. Levin: “Why didn’t you tell them you were going short?” The Goldman team is unprepared for this, and head man Sparks is riffling through a huge binder of documents, now saying they don’t show that Goldman was short (betting against).

Levin finesses nicely: “IF you were short [which he "knows you were"], and were asked [according to the transcript] ‘how do you get comfortable’ with this, don’t you have an obligation to answer it honestly? Don’t you have a duty to disclose an adverse interest to your client?” Sparks won’t answer and Levin says so. He keeps going with this deal. Sparks doesn’t know the details and is clearly off-guard, flustered even. Levin’s point: Goldman’s traders were supremely cynical, selling woebegone mortgage-backed securities while betting against them, without letting the clients the know.

Another deal. You’d hate to be the guy on the receiving end of this grilling, whether you were guilty as sin, as suggested by an internal Goldman memo on the next batch of MBS: “Boy that Timberwolf was one sh_tty deal.” And yet it remained a “top priority” to sell the deal.

The defense: The buyers always know what they’re doing. That’s been the defense since CEO Lloyd Blankfein testified publicly months ago.

Update: 11:34 AM EST

Bethany McLean, who worked briefly for Goldman in the 1990s and contributes to Vanity Fair now, has an op-ed in the NYT today arguing that while Goldman is by no means a good guy in the financial crisis, neither is it the only bad guy. A choice quote: “[T]he worst actor of all is the one leading the charge against Goldman: our government.”

Update: 11:23 AM EST

Chairman Levin is hammering Daniel Sparks, the former head of Goldman’s mortgages department, over whether traders have an ethical responsibility to let clients know whether they intend to sell certain securities they are invested in short.

“I don’t think you want to answer,” Levin says.

Update: 11:05 AM EST

PAUL SOLMAN: Fab Fab up, reading in a French accent. His clients were “sophisticated financial institutions.” He’s now explaining why complex instruments are useful to institutions. And now he’s defending himself — vigorously, even angrily — against the SEC charge against him: that he sold a customized portfolio of mortgage-backed securities knowing it would fail. Finally, time for questions, with Levin being the first to ask.

Update: 11:00 AM EST

PAUL SOLMAN: Josh Birnbaum is = a trader who urged betting against the housing market, but says he was told by senior management: “Get smaller, reduce risks, get closer to home.” That is, he was told to sell his “short position” — his bets against housing — even though he fervently believed and indeed argued that sticking with the trades would be more profitable for Goldman, as they would have been.

Then up, Michael Swenson, another Goldman trader emphasizing the theme of risk management and “bringing the desk closer to home”: i.e., closer to a neutral position that was neither betting for or against. As a result, “we left money on the table.”

Update: 10:51 AM EST

You can read the first panel’s prepared remarks to the committee here.

Update: 10:50 AM EST

PAUL SOLMAN: Highest-ranked of the first Goldman team (of traders), Daniel Sparks, is up first, reading his opening statement. The main defense: the firm was trying to reduce risk, pure and simple, and that was no easy task, given the volatility of markets and the complexity of the products.

Update: 10:47 AM EST

PAUL SOLMAN: Sen. Collins finished by pinpointing the fact that Wall St. bankers have no “fiduciary responsibility” to their clients and said “we’ll be looking into that.” In other words, can firms like Goldman sell investments to clients that the firm itself doesn’t believe in.

McCain: “I don’t know if Goldman did anything illegal, but there’s no question what it did was unethical.”

McCaskill: “Synthetic CDOs” are simply a gamble in the “the la-la land of ledger entries.” She truly reamed out the Goldman team, which is looking mighty uncomfortable 45 minutes in. The self-described “fab Fab,” GS trader Fabrice Tourre, looks especially uneasy.

Update: 10:43 AM EST

SIMON JOHNSON: Senator Carl Levin made a very strong opening statement – Goldman Sachs was betting heavily against the same securities it was selling to clients

His key point is that this was more than any kind of “hedging” – it was risk taking, not any kind of market making activity

The first Volcker Rule (proposed by the administration in January, and still present in the Dodd bill last week, albeit in weakened form) addresses this issue, by not allowing banks to make big bets on their own account (“proprietary trading”). Partly this is about the big banks taking on risks that they do not fully understand and cannot manage – hence causing system risk.

But, as today’s hearing seems likely to show, there is also an inherent and inescapable conflict of interest in this kind of activity. Goldman sold mortgage-backed securities (and related derivatives) to clients, presumably suggesting that these were attractively priced. At the same time, they were betting heavily against these very same securities (and other, closely correlated products)

Regardless of whether or not this combination of activities was legal or ethical, the boarder question here is: Do we really want the heart of our financial system run along these lines?

It’s not enough for Goldman to say, “these were the rules” or “everyone does it”. To really defend their turf – and their way of doing business – they need to persuade us that there is something helpful to the rest of the economy from letting them run markets in this fashion. If Goldman does badly, this could greatly strengthen the case for tough financial reform – including through amendments now being drafted on the Democratic side of the aisle

On the merits of this argument, Goldman has an uphill battle. But these are smart people with the best lawyers and PR advisers in the business. The ball is now heading to their court – let’s see how they do.

Update: 10:36 AM EST

PAUL SOLMAN: Republican Senator Susan Collins has just used the word “unseemly” about Goldman’s betting against the housing market while continuing to sell mortgage-backed securities. She, like Democrat Levin, is reading a review of the crisis and Goldman’s role, which she just described as “ignoble.” Meanwhile, the young masters of the Wall St. universe sit at the testifying table, trying to look stoical.

Update: 10:32 AM EST

PAUL SOLMAN: As Senator Carl Levin, over those low-slung glasses of his, reads an opening statement that has already lasted more than 20 minutes, the theme is clear: Goldman wasn’t just hedging its portfolio by betting AGAINST the mortgage market. Betting against, according to Levin, was Goldman’s primary objective throughout 2007, and the source of much of its profits. Yet Goldman continued to sell the very investments it was betting against. He just read an interesting quote from the ’30s about how bankers must never sell investments to clients that the bankers themselves don’t believe in. That’s the nub of the charge against a firm increasingly being called “the squid,” after investigative reporter Mike Taibbi’s 2009 term for the firm: “Vampire squid.”

Update: 10:20 AM EST

The Senate Permanent Subcommittee on Investigations, chaired by Sen. Carl Levin (D-Mich.), opened its hearing on Goldman Sachs and the financial crisis at 10 AM Tuesday with Sen. Levin’s opening statement. The first Goldman executives to make appearances before the subcommittee today are current or former employees of the mortgage and structured products divisions at the firm, including Fabrice Tourre, a trader named in the recent SEC fraud suit against Goldman.

Here’s Levin in his opening statement:

I hope the executives before us today, and their colleagues on Wall Street, will recognize the harm that their actions have caused to so many of their fellow citizens. But whether or not they take responsibility for their role, I hope this Congress will follow the example of another Congress, eight decades ago, and enact the reforms that will put a cop back on the Wall Street beat.