Wednesday, April 8, 2009

Ah! So That's What the SEC Was Doing ...

This story was good for a dark chuckle of despair (bold mine):
While Wall Street executives were sinking the economy and Bernard Madoff was ripping off investors, the Securities and Exchange Commission (SEC) was engaged in a multi-million dollar effort to...rearrange their desk chairs at their Washington D.C. headquarters.

"This is a total waste of time that we should be spending conducting investigations," said Steve Ellis, Vice-President of Taxpayers for Common Sense who calls SEC’s $3.9 million dollar desk reorganization "preposterous."

According to a new report from David Kotz, the Inspector General for the SEC, employees were subjected to a massive reorganization in 2007 and 2008 that they now say was unnecessary and did not improve organization or communication. Over 600 employees, 81% of those surveyed by the Inspector General, said that the rearranging of desks was not "worth the cost and time."
So while Bernie Madoff Ponzi'ed billions of dollars out of investors' pockets, the SEC couldn't be bothered to investigate because it was too busy trying to figure out whether Joe should sit next to Fred or Mary. Or maybe Sam? You know, Sam and Joe sometimes need to talk, so what if we put Sam here, then Bill over ... wait a minute, that won't work. Bill has to be near Sally.

Good Lord. This, I predict, will be the legacy of the SEC under Chris Cox, who struck me as a poster child for the Bush "do nothing" regulators. He was striking for his cluelessness deep into the financial crisis. An especially telling Cox moment, I thought, was when he suddenly rushed over to Congress and basically said, "Holy cow, I just found out there's a $50 trillion credit default swap market out there. We need to start regulating that. Can you pass something, like, this afternoon?"

Cox appeared to be another smug Bushie who assumed his job was basically a sinecure. In essence, their thinking goes: markets regulate themselves, and the invisible hand does all the heavy lifting, so if you need me I'll be out by the cabana. He made sure that the SEC prosecuted a few nickel-and-dime fraud artists and insider traders here and there (in the grand scheme of Wall Street crime, these are like working-class weekend pot smokers). He always struck me as inept and indifferent and ideologically opposed to the very sort of job he held -- not exactly what you seek in an effective regulator.

If you want more on Cox, here's a profile of the man and the weak-kneed mess he turned the SEC into, after he inherited a respected regulator from William Donaldson.