Trump Nominates ‘Alligator’ Clayton To Run SEC

Dave Johnson

Dave Johnson Fellow, Campaign for America's Future

Saying on the campaign trail that Wall Street banks and hedge funds are “getting away with murder,” President Trump promised voters he would “drain the swamp” and “reduce the corrupting influence of special interests on our politics.” He was playing on the public’s sentiment that Washington is a swamp of Wall Street and corporate interests, connected insiders who feed off of taxpayers.

Trump’s “closing argument” television ad explained exactly who his villains were. Showing clips of Wall Street, stock tickers, world leaders chumming with Hillary Clinton as well as Lloyd Blankfein, the Chairman and CEO of Goldman Sachs, and billionaire philanthropist George Soros, Trump says in voiceover:

It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.

That was then, this is now.

Instead of following up on his promises, Trump has brought so many swamp creatures into his administration that it has become a cliché to say that Trump is filling the swamp with alligators.

Jay Clayton, Trump’s nominee to head the Securities and Exchange Commission (SEC), appears to be one more alligator.

How do we know this? Well, for starters Clayton was, literally, the “Goldman Sachs bailout lawyer.” He represented Goldman and other Wall Street firms during the aftermath of the 2008 financial crisis. So there’s that.

Clayton is a partner at Sullivan & Cromwell, a law firm that is, according to FN Financial News, “more closely associated with Wall Street than perhaps any other law firm.” His wife, meanwhile, works at Goldman Sachs as a wealth management advisor.

Ohio Senator Sherrod Brown describes Clayton as “an attorney who’s spent his career helping Wall Street beat the rap.”

With so many Wall Street ties,”Clayton will be the most financially conflicted SEC chairman in history.” If confirmed, he might have to recuse himself (but not those he hires) from involvement in a huge amount of SEC’s work. According to the Trump Transparency Project,

If confirmed, Clayton will be required to recuse himself “for one year from voting on any particular matter if a firm or individual is being represented by” his law firm, and “for a year from working on matters that involve clients he represented in the past year.” He also will be “recused indefinitely if a deal he previously worked on comes up during SEC litigation.” Based on an analysis of “recent” and “selected” Sullivan & Cromwell clients, it is estimated that Clayton will need to recuse himself from cases involving nearly one-third of the institutions on the Financial Stability Board’s list of “global systemically important banks.

So there’s that, too.

But Clayton’s professional ties are not the only concern.

Rolling Stone’s Matt Taibbi wrote about a “mysterious firm,” WMB Holdings, behind much of Clayton’s “family income.” In fact, WMB accounts for around $4 million a year in “family income.” A pittance to the likes of Trump and those he surrounds himself with, to be sure, but still something to marvel at.

According to Taibbi, things start getting weird when you look deeper into this firm.

Public Citizen for a variety of reasons believes that WMB “may also be the parent of Corporation Service Co. (CSC),” another large business services firm with offices in “Delaware, Australia, France, Hong Kong, Singapore, Sweden, and the United Kingdom.”

Among other things, WMB was for some time listed as the parent of a company called CSC Trust Co., now called Delaware Trust Co.

CSC Global claims 2,500 employees as well as 180,000 corporate customers, while also representing 10,000 law firms. The company appears to do more or less the same things that Clayton says WMB does, dealing with creating legal business entities, management of licenses, upkeep of filings, dealing with service of process, etc.

Companies like these rig the system by helping set up strings of shell companies that make it impossible for law enforcement to track down who owns companies, and whether their money is in tax havens. For example,

Interestingly, when Public Citizen ran the names of WMB and CSC through the Panama Papers database, they found nothing. But when they ran the address common to both companies – 2711 Centerville Rd., Wilmington – through the database, they found it connected with numerous firms whose agent was the infamous Mossack Fonseca, many of them offshore companies.

WMB and CSC help set up shell companies. Like Donald Trump’s offshore companies, for example. Last year the Wall Street Journal looked into some of Trump’s holdings, and how he uses a web of Limited Liability Corporations (LLCs) to conceal the true extent of his holdings, and hence his potential conflicts of interest as president:

President-elect Donald Trump owns a helicopter in Scotland.

To be more precise, he has a revocable trust that owns 99% of a Delaware limited liability company that owns 99% of another Delaware LLC that owns a Scottish limited company that owns another Scottish company that owns the 26-year-old Sikorsky S-76B helicopter, emblazoned with a red “TRUMP” on the side of its fuselage.

Across Mr. Trump’s business, he uses a similar web of privately held LLCs and other entities to house his assets—everything from real estate to a vintage carousel in Manhattan’s Central Park, according to a Wall Street Journal analysis of hundreds of pages of his corporate filings and personal financial disclosures. Fifteen entities, for example, are used to hold his interests in two airplanes and three helicopters.

You get the picture. We’re talking about companies that own companies that hide companies that own companies that own hidden companies.

This matters. Clayton appears to be involved in helping companies hide things like profits, tax obligations, assets and other companies. THIS is who Trump nominated to head the SEC, which is supposed to enforce transparency.

And this is just the tip of an iceberg – the kind of iceberg shell companies help create.

Why Does This Matter?

Why does it matter who is in charge at the SEC? The SEC enforces federal securities laws and regulates Wall Street. The idea of the SEC is that if the public and investors have all the facts about companies at the same time they have a level playing field on which to make investment decisions. Otherwise Wall Street can be rigged to work for those who already have the power and the money, which necessarily means the system works against everyone else.

For some time the SEC has been a “captured” agency, controlled by a “revolving door” for those it is supposed to regulate. Instead of enforcing transparency and open information, the agency has blocked rules requiring companies to disclose political spending (a primary mechanism of agency capture), rules requiring companies to show the “pay ratio” between top executives and the rest of the workforce and other rules. The SEC dodged issuing “tax transparency” rules requiring Exxon, for example, to disclose bribes paid to dictators long enough for Republicans to gain control of the government and repeal them.

So yes, it does matter who runs the SEC. It’s about the bigger picture of a system that works for We the People or a system rigged for a few already-wealthy, already-powerful people. It’s one or the other.

Will Clayton be on the side of Wall Street, or on the side of We The People as head of the SEC? All Clayton’s signs point to his loyalties to The Street. And, really, why else would Trump have appointed him?

***

Reposted from Our Future.

Johnson also is a fellow at the Commonwealth Institute and a Senior Fellow at the Institute for the Renewal of the California Dream. Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson.

Posted In: Allied Approaches, From Campaign for America's Future

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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