Will Obama Hire Yet Another Bank-Friendly Regulator?

Another day, another Wall Street friendly politico set to regulate the banking industry: Bloomberg reports that former Rep. Scott Murphy, an outspoken advocate of weakening Wall Street oversight, is about to be hired by the Treasury Department.

Who is Scott Murphy? Back during the effort to reform Wall Street, Murphy was one of the most bank-friendly lawmakers in Congress as a member of the New Democrat Coalition. The group was perhaps the most powerful force in the House for weaker regulation of derivatives, the complex financial products that helped tank the economy in 2008.

At the same time, Murphy and the New Democrats raked in campaign contributions from banks, spent quality time their lobbyists at a swank resort, organized fundraising trips to Wall Street, and saw staffers head through the revolving door to work on K Street for the financial industry.

“Awesome” is how Financial Services Roundtable chief Steve Bartlett, described the group to me in an interview last year:

“They are my favorite group in Congress in the sense of doing the right things for the country,” Bartlett said in an interview with ProPublica. “It’s a group that is focused on the economy and on the business sector and on the for-profit sector, and I’ve just found them to be extraordinary and extraordinarily effective.”

Within the group, Murphy played a key role on Wall Street matters. He sat on the New Democrats financial services taskforce, where policy ideas were generated and legislation was crafted. As Rep. Jim Himes, a former Goldman Sachs banker who also sat on the New Dem taskforce, told the Huffington Post in 2009:

“Scott Murphy and I and two or three others really drove the creation of the derivatives bill. Nobody understands it, but it’s one of the more important aspects of the regulatory reform. And looking at it as a former businessperson, I think we’ve really struck a good compromise. I don’t think the bill is in any way heavy-handed.”

The same Huffington Post report then described how Murphy “punched a gaping hole in the derivatives portion of the bill — which was already riddled with gaps — exempting all sorts of swaps-trading from regulation and effectively undermining the legislation.”

With a resume like that, sure sounds like Murphy’ll do a heck of a job regulating Wall Street.

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Sebastian Jones

Sebastian Jones is an editor at the Washington Monthly.