Promontory, the consultancy firm for banks in distress, is the place you go if you are a senior regulator and you want to cash out. Eugene Ludwig, its founder and the former OCC head, makes $30 million per annum, way more than CEOs of banks with actual branches and loans and so on. His subordinates include a raft of Obama first termers confirmed by the Senate.
Felix Salmon thinks that this means that Promontory needs to be regulated. But I think that the firm's services are bought for two reasons. One - the bad old Washington lobbyist one - is to try to get the regulators to lay off. But the other - the government alumni promotes law observance one - is to concede that the regulators might lay off if you implement some reforms, and hire some people who can tell you what those reforms need to be, and how to sell them to the government.
That means that the strange thing about Promontory - and it is strange - is that it is so, so profitable. Washington lobbyists look at seven figure salaries with awe. Eight figures? Hard to even parse. The gap between SEC deputy director and Promontory executive is stunning when the competition amounts to law firms and Ernst & Young. In the next set of Promontory stories, I'd like to see more about how all of the money is made.
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