The cliché in politics is that its not the wrongdoing that destroys you, it's the cover-up.
A variation of that is unfolding after revelations that the wife of the head of the Swiss National Bank made around $65,000 in profits from buying U.S. dollars and selling them for Swiss francs after the SNB took actions to raise the value of the dollar relative to the franc.
There's some controversy over whether the wife made the trades on her own volition or whether her husband, Phillip Hildebrand, gave her advice.
Far more galling than than the actual trading, however, has been the white washing of it by Swiss banking authorities and their accountants at PriceWaterhouseCoopers. Both insistthat nothing was done that violated the rules of the Swiss National Bank.
Imagine, if you will, that then-Treasury Secretary Hank Paulson's wife bought shares of JPMorgan Chase just before the government wrote the bank a TARP check for billions of dollars. Or imagine that Ben Bernanke's wife was discovered to be buying mortgage-backed securities just before the Fed announced a round of quantitative easing that drove up the value of MBS.
This would be a huge national scandal. No one would give a flock of seagulls whether or not a rule was technically violated. We do not expect public servants and their immediate families to personally benefit from the policies they enact. When they do, profits should be disgorged regardless of whether it was done with inside information.
Does this put burdensome restrictions on family members of powerful policymakers? Of course it does. But guess what, Mrs. Hildebrand, that's one of the things that comes along with having your husband be your nation's top central banker. You really shouldn't be speculating in currencies at all.
When I was a lawyer at a big New York firm, I was barred from trading altogether. I could make long-term investments only. It didn't matter at all whether I had inside information. I just couldn't do it. CNBC imposes similar restrictions. I don't trade.
If not trading is the price of being a simple Wall Street reporter, surely it's not too much to ask of the family members of public servants.
Maybe it shouldn't just be the Hildebrands who get hounded out of office, but anyone in the SNB who doesn't understand why this is a very serious problem.
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