Senators may have appeared shocked by certain revelations in Tuesday's hearings, she says, but it's not the first time that questionable practices involving derivatives have rocked Wall Street. Roper cited a notorious scandal involving the former Bankers Trust during the 1990s, in which two employees were caught on tape discussing that its client, Procter & Gamble Co. (PG), would never know the amount of huge profits the bank stood to make on a leveraged derivatives deal.
Roper may be waiting a long while for a fiduciary standard to apply to brokers in certain institutional contexts. Fiduciary advocates, as she notes, are having enough challenges trying to convince lawmakers to impose the standard on retail brokers who give advice to small investors.
A provision to extend the standard to retail brokers who give investment advice was replaced in the financial-reform package with a proposal that simply calls for more study.
All of which is at quite a distance from the universe in which Blankfein operates, and about which he has at least been consistent. "We are not a fiduciary," he said in his January appearance. He certainly succeeded in making those sentiments clear again on Tuesday.
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