GOP: More Madoffs, Please
Percent Change SEC Staff Workload: 1991 – 2000
Chart sourced via GAO analysis of SEC data
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If you can’t stop the legislation, you can defund it.
That is what our Chart of the Day shows, the net impact of defunding regulation. As we previously discussed 1 year ago (SEC: Defective by Design?), there has been a concerted effort at keeping regulators under-funded. The SEC has lacked sufficient staff, thus holding enforcement efforts to a minimum.
This is not an accident. Imagine being allowed to have an army and guns, but no bullets are allowed. The banks and big Wall Street firms are very comfortable with this arrangement. And as Matt Taibbi made clear (Why Isn’t Wall Street in Jail?) , the revolving door between the SEC and Wall Street has prevented any criminal prosecutions
And its not a bi-partisan issue this go around, its the crazy wing of the Republican Party:
“Congressional Republicans intent on big spending cuts are on a collision course with Wall Street’s top regulators over a plan to slash millions from agency budgets.
Lawmakers are targeting the Commodity Futures Trading Commission and the Securities and Exchange Commission. The work of both agencies is set to balloon as the Dodd-Frank financial reform law is implemented. . . .
The most recent comprehensive spending bill produced by House Republicans would chop the CFTC’s funding by $56.8 million — almost a third of the agency’s entire budget — over the next seven months. Funding at the SEC would be cut by $25 million over the same time period.”
To give you an idea of what this looks like, consider the chart above — it shows how the SEC caseload has risen, while its budget remains flat.
Chew on this: Derivatives have been radically deregulated for a decade, thanks to the misnamed Commodity Futures Modernization Act. Now imagine the entity charged with RE-regulating them, the Commodity Futures Trading Commission, has insufficient funds.
The end result of this? An increasing possibility of yet another crisis, one where traders know Uncles Sam & Ben will bail them out.
Gee, I wonder how that will play out? Guess we are gonna find out eventually . . .
>
Previously:
SEC: Defective by Design? (March 2010)
Defanging the Regulators (November 2010)
Source:
Regulators: Wall Street reform at risk
Charles Riley
CNN/Money, March 1, 2011
http://money.cnn.com/2011/03/01/news/economy/sec_cftc_funding/index.htm
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March 1st, 2011 at 12:37 pm
Gotta assume this doesn’t surprise you in the least, since you’re often 10 steps ahead of me and this doesn’t surprise me in the least.
March 1st, 2011 at 12:45 pm
The gall of this was surprising to me . . .
March 1st, 2011 at 12:51 pm
The current edition of the GOP is a cluster of fanatical zealots which mantra is to destroy any vestige of the New Deal, any institution that may safeguard the common good. These are to be replaced by lap dogs of big money and Korporations, with the sole intent of sucking dry every atom of wealth pertaining to the “little people” and direct the proceeds to the GOP donors class.
No lies, distortions of the truth or history (Amity Schlaes anyone?) is too big or small for them. They live in a parallel universe, where they are securely protected from reality, thanks in no small part to a slothful, brain-damaged and parasitic Beltway punditocracy for whom the “He-said-She-said” passes for fact checking and balanced objectivity. Nice way to “validate” the most vile misrepresentations and lies as yet just another opinion to be equal to facts on the ground.
This is how banana republics are created and the GOP (and the DCCC too BTW) is well on its way to accomplish that goal.
Delenda Washington!
March 1st, 2011 at 12:52 pm
Delenda Congress too by the way!
March 1st, 2011 at 1:04 pm
Its obvious now that Republican cuts to the budget are political and not legitimate efforts to reduce the budget. Having worked in the financial sector for 40 years, I believe it is one of the most morally corrupt professions in the U.S. It needs to be regulated. In 2008 the financial sector brought the U.S. economy to its knees. Now the Republicans, in the name of budget reductions, want to eliminate the ability of regulators to prevent 2008 from happening again. The next time it happens, this country will find itself in the greatest depression of all time. Anyone with assets in the U.S. will see tremendous loss.
If the Republicans were serious about reducing the budget one very easy and quick way of doing so would be to impose means tests on those receiving Medicare and Social Security. There many people with the ability to pay all or a greater share of their healthcare costs. There are also those who have no need for a social security check. The Republicans have barely whispered about making changes to the biggest financial trap in the U.S. government’s budget—Medicare. Where they are cutting does little to reduce the budget deficit, but it does plenty to harm the legal infrastructure of the government.
Republicans are focussed on two things. Eliminating programs they dislike, including NPR, various eductation programs, and reducing the power of those charged with finding those who break the law. That includes the FBI, the IRS, and those who enforce the financial regulations.
March 1st, 2011 at 1:11 pm
I’m shocked – shocked – to find there’s de-funding of things protecting us from the rich.
I guess we know why gov’t is “incompetent” now.
Maybe if we just make all the uber rich Koch’s and Wyly’s all get a Facebook page loaded with their hi-jinks…
http://scienceblog.com/43196/facebook-linked-to-one-in-five-divorces-in-the-united-states/
March 1st, 2011 at 1:12 pm
This is about getting on their knees to suck on the corporate pipe that spurts dollars.
The Democrats are hapless, the GOP are shameless whores
It feels like we are doomed . . .
~~~
BR: You sent me back to January to find my own similar imagery:
March 1st, 2011 at 1:24 pm
Great. Now I will have that imagery in mind while finding more subtle words to discuss the current regulatory environment to a mixed gender class of early 20 somethings.
March 1st, 2011 at 1:26 pm
This is a 10 year old chart. In the 10 years since that chart ends, the SEC’s budget nearly tripled. See http://www.sec.gov/foia/docs/budgetact.htm. Madoff, Consolidated Supervised Entities, ratings agency gaming, etc., all happened in the midst of a flood of additional resources.
I agree the SEC is a failed agency, and I agree that more resources might be part of a solution, but recent history shows that resources are not sufficient. Remember, one of the SEC investigators who examined Madoff told the SEC Inspector General that “a typical SEC examiner walks into a room where there are a bunch of dead bodies lying around and they notice that the clocks are 10 minutes fast.” An SEC senior official told the SEC Inspector General that even though he had been warned Madoff was a Ponzi scheme, he didn’t actually look for a Ponzi scheme – or ask anyone else to look for it – because he didn’t think it was his responsibility. How does more money alone solve these problems?
Finally, several times you’ve used the same 10 year old data to make this case. Why?
~~~
BR: I’ve used this because it shows how the post 2000 scandals were allowed to develop — The accounting scandals, the analyst scandals, the Madoffs.
After these scandals, there was a belated increase in funding — almost to where they should have been pre-scandal, just to keep up with the growth of the finance sector. And that is before Sarbanes Oxeley, which added dramatically to the enforcement obligations and commensurate costs of enforecement.
Whenever I show this, you seem to argue that the SEC is adequately funded. Care to explain why?
March 1st, 2011 at 1:26 pm
Your deeply found faith in government regulators to catch the Madoffs of the world is intriguing. We had an huge government agency devoted to “regulating” Fannie Mae and Freddie Mac (OFHEO) and that did us a whole lot of good!
What always amazes me is why no one seem upset that the government doesn’t try the evil doers and put them in jail. Sure there is Madoff….he’s in jail. But only a small handful of other offenders are in jail. All the billions of dollars in bonues paid to bankers, mortgage brokers, bond raters still have all that money in their pockets (or stored over seas)…. I see very little interest or motivation to claw back that money. And that would be a far better deterrent. In short, perhaps we should hire more FBI agents instead of SEC regulators.
~~~
BR: The solution is obviously LESS regulation! That worked out so well LAST time.
Real regulators, not captured by their industry, with no revolving door, and aggressive campaign finance reform laws, are my answer. Democracy does not work when the congress is bought and paid for.
March 1st, 2011 at 1:34 pm
Barry, love the blog. But i see things much differently from a political spectrum.
First of all, the fact that we can’t stop recessions and depressions should be proof enough that regulation can only go so far.
You know what the ultimate regulator is? Losing. Failure. Destruction. “Taking your medicine” as they used to say. “Leaving a bad taste in your mouth” as they used to say.
Believing regulation will prevent bad behavior is like believing that traffic cops can prevent speeding and bad accidents. Sure, they can help deter, but if someone is intent on driving 130mph down the highway, there’s nothing anyone can do to guarantee they don’t crash.
But you know what? If that person gets in a bad accident, i guarantee they won’t drive the same way again. They’ve learned their lesson through failure. Something i think your readers need to understand.
~~~
BR: You don’t see things very differently from me — I was highly critical of Greenspan’s “hair of the dog” approach to the business cycle. And I pretty much screamed against the bailouts as a muisguided reward for the incompetent.
But I have worked with enough bankers and traders that I KNOW they must have adult supervision. They cannot be trusted to set their own rules, leverage, disclosures, etc. They even showed that they cannot be trusted ti set their own compensation (if they know the government is back-setting)
March 1st, 2011 at 1:43 pm
The correct way of explaining this effort is that the GOP (on behalf of its constituents) have made a concerted and largely successful program of decriminalizing white-collar and specifically securities fraud.
The distinguishing characteristic of modern capitalism is very large and now global capital markets. Its impossible to have efficient and trustworthy capital markets without regulation and when required, criminal prosecutions.
Adam Smith stated the need for regulation in several passages in the “….the Wealth of Nations”: perhaps the best was “…Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters…”.
The phenomena of “regulatory capture” is probably the biggest problem modern capitalism faces and if not controlled will severely damage the system. Call regulatory capture crony capitalism, kleptocracy, a tax or externalized costs of production or any other name you desire. When providers of capital believe the system has become gamed they will either take there capital elsewhere or stuff it in a mattress.
And the Bernie Madoff scandal? A perfect example of the problem.
March 1st, 2011 at 1:56 pm
Money is just part of the picture.
If you can appoint people who will subvert the agency’s mission, that works even better. An example is the “judge” who stated that he will never rule in favor of an investor against the brokerage houses.
March 1st, 2011 at 1:57 pm
If we are “guranteed of bailouts” then “why have an SEC”? Indeed “why have a government period”? Unless of course you’re saying “you can’t trade this thing.” unless of course you’re saying “you can’t trade this thing PROFITABLY.” Ahh, “I get it.” There’s no money in bailouts…of course! And “should we become bailout-nation” I ask you, sir…”is there any money in the nation”? Just a “form of arguing” somebody taught me a “few hundred years ago.” Sorry if it offends.
March 1st, 2011 at 1:58 pm
Its an old Republican agenda: starve the beast even if you hurt a lot of people by doing so cuz, after all, the is a MORAL issue.
At least, Boehner thinks so. We are on an “unsustainable and immoral path” according to him.
And these guys know all about morals, as their conduct so frequently shows.
March 1st, 2011 at 2:03 pm
It worked so great for making it illegal to employ illegal aliens. The GOPsters took all the credit for being so tough on illegals and instituting fines on those that employed them – then they defunded the agencies that were in charge of investigating the employers. Anybody taken a closer look at the fencing strategy at our border? Fabulous theater for the masses to get their votes and at the same time not preventing the flow of illegals to businesses (their campaign contributions). I guess there’s no need to change it as long as it works on the idiots of this idiocracy.
March 1st, 2011 at 2:29 pm
Why don’t they just transition the very bored and now anachronistic civil rights enforcement division from “Justice” over to the SEC? I mean, it’s not like there’s any threat of a new Jim Crow rising again.
March 1st, 2011 at 2:49 pm
This is analogous to the intentional spiking of the Ted Stevens prosecution. Conviction overturned due to a ‘technicality’ despite the open court testimony of the man who bribed him with BIG OLE BAGS O’ MUNNY.
Oh, and BTW, Ted Stevens- dead, plane crash; and US Asst Atty who prosecuted the case- dead- sewercide, now ain’t that a headscratcher.
The only possible conclusion: there is a critical mass of extremely corrupt people in positions of power and leadership in this country.
Anybody notice the game theory in Pimco’s et al lawsuit against the stepped on MBS flake sellers? Or howsa about Sir Allen Stanford getting the ole Neal Pert on the skins treatment so that the discovery process goes a little like this: “a der, a derderder, a der”, ‘Let the record reflect that the accused has answered with copious amounts of drool.’
March 1st, 2011 at 3:01 pm
The only rules there are no rules. Kenny L. was right. This country is in deep trouble. All of our problems will be over as soon as the unions are dismantled and the middle class is reduced further. God what a country.
March 1st, 2011 at 3:01 pm
Another reason why we need regulation—
General Mills Mind Games – comedy skit about Total Blueberry Pomegranate Cereal (
http://naturalnews.tv/v.asp?v=851519FA1AC72A56F7205D2285CC66CF
March 1st, 2011 at 3:11 pm
More funding will do absolutely nothing to fix the real problem, which is that the SEC is completely captured, corrupted and co-opted by the industry it is charged with over seeing. Did no one here actually *read* Taibbi’s latest Rolling Stone piece? Barry, you frequently mention the demise of old-fashioned investigative journalism, well here ya go:
http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?page=1
[quote]The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can’t balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC’s army of 1,100 number-crunching investigators to make their cases. In theory, it’s a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.
That’s the way it’s supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who’s in office or which party’s in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.
The systematic lack of regulation has left even the country’s top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. “I think you’ve got a wrong assumption — that we even *have* a law-enforcement agency when it comes to Wall Street,” he says.[/quote]
And for those of you – including Barry in a post from last year, when the SEC announced its new director of enforcement – who were hoping things might change in the wake of the biggest collective fraud in human history, so sorry to disappoint:
[quote]In the end, of course, it wasn’t just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice “Fabulous Fab” Tourre, Goldman’s outrageous Euro-douche who gleefully e-mailed a pal about the “surreal” transactions in the middle of a meeting with the firm’s victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC.[/quote]
I urge readers to read the full article, which concludes with a very revealing vignette from a conference on financial law enforcement held last November in NYC – then, pray tell, tell us again with a straight face that the problem is that the SEC needs more funding.
March 1st, 2011 at 3:13 pm
Careful, BR. Posts like this will get you booted from the rosters of top libertarian blogs. Remember, for that crowd, markets are self-regulating.
March 1st, 2011 at 3:16 pm
The policy of systemic financial fraud. That is what has been breed.
March 1st, 2011 at 3:21 pm
BR: The SEC has many problems and debates about funding strike me as well-meaning but unintentionally reductionist.
For example, regulatory capture is a significant problem that has little to do with funding. And while the SEC is a financial industry and economic agency it is dominated by lawyers and plagued by innumeracy; in the recent past it even bureaucratically +downgraded+ its economists. Its culture and staff complacency are problems – and likely account for its misses on Madoff – and these have nothing to do with funding.
We can write bigger checks but they won’t solve the problem, and we know that because much bigger checks in the last 10 years haven’t solved the problem. What else might? Make SEC staff accountable for big misses, just as private sector compliance staff are accountable for big misses. Among other things, the SEC could use its own Rules of Practice to bar such staff from practicing in front of it when they leave the SEC for the private sector. Here’s another idea – replace some of the lawyers with economists and data analysts.
Funding for the SEC did increase substantially after the Enron and Worldcom scandals. Your point about its neglect in the 1990s leading to the accounting scandals of the early 00′s is spot on. But Madoff and the CSE are different kettles of fish. On Madoff, the SEC Inspector General’s depositions into that matter, the most revealing look at the political and personal inanities of a bureaucracy this side of Catch-22, show a deeply flawed – a failed – agency, with the stink going quite deep and having little to do with money. See http://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibits.htm.
Funding is important. Management and accountability are more important.
March 1st, 2011 at 3:27 pm
Do Republicans ever lose money in various financial scams, ponzis, and fraud? If so, than one would think it would be in their self-interest to hire more “cops.”
Unless, of course, they:
a) know better and NEVER EVER deal with Wall St and investments (with the rare exception when “friends of Angelo” need a special rate)
b) get more money from the industry in bribes and kickbacks than they lose in the scams and ponzis
c) get inside info from Wall St and, unlike Chuck Prince, know exactly when the music is about to stop
d) have guaranteed high-paying employment for themselves and/or family from Wall St and by defunding the regulators they increase their future bonus
e) they’re a bunch of pre-programmed morons to the extents that incredible that they’ve learned to spell their name!
March 1st, 2011 at 3:31 pm
Total lack of regulation and supervision. What could possibly go wrong?
March 1st, 2011 at 3:31 pm
It’s sad that honesty and integrity seem to have been purged from our society. At first blush I’d agree that funding for the regulators should be at a level commensurate with the size of the industry they’re charged with regulating. But, I also have the fatalistic view that it really wouldn’t help. We’ve entered the era of Sgt. Schultz regulation – “I see nothing. I know nothing”.
The centers for organized crime in the Americas reside not with the drug cartels, but in Washington, D.C. and Wall Street.
March 1st, 2011 at 3:38 pm
ewmayer; rarely does the corporate cleptocracy use just a single tool to shear the sheeple. We have issues with (lack of) laws making most of their crimes legal; issues with a corrupted SEC with to many (intentionally or not) incompetent agents; and a lack of sufficient manpower to do careful investigation of all the things that needs to be investigated. If you accuse Barry of focussing on just one of the legs in this 3 legged stool, he could accuse you of the same.
March 1st, 2011 at 4:04 pm
How much of that chart can be attributed to productivity gains and computerization? Yes, you can have fewer workers doing twice the work when you also have better tools to use. The same chart could be used to show the number of doctors to amount of new information on diseases and their treatment.
I forget where it was said but to paraphrase: “Put the head of GS in a PMITA maximum security prison for 6 weeks and all this nonsense on Wall Street will end. ”
My .02c
Soylent Green Is People.
March 1st, 2011 at 4:05 pm
Here’s more GOP media machine nonsense from Rupert Murdock and Fox News:
Financial Terrorism Suspected in 2008 Economic Crash
“…Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system…”
“…The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy…”
http://nation.foxnews.com/financial-terrorism/2011/03/01/financial-terrorism-suspected-2008-economic-crash
ROFL!
Fox News and Washington Times deflecting the cause from Bush’s idiotic policies packaged as the “Ownership Society” which allowed the Wall Street investment houses to buy re-packaged subprime loans and borrow 40 and 50 to 1 to do it.
Sheer utter nonsense. Anything to deflect the blame from their corrupt near-destruction of the financial system but the GOP media machine followers will believe it, email it around, and take it to heart because they believe anything they are told. Bahhh… Bahhh…
…a “Pentagon Contractor” ROFL!
March 1st, 2011 at 4:17 pm
This is quite simple:
Do you want a real cop on the beat, or do you trust bankers to self-regulate ?
That is my bottom line !
March 1st, 2011 at 4:45 pm
Barry,
I had an opportunity to work for our states insurance department as a regulator, specifically in helping to implement Obamacare for the state (lots of authority was given to the states on this).
The job pays shit, furloughs, pay freezes. Its a real turn off.
I don’t understand why we are generally willing to overpay mediocre government workers in marginal jobs, but we seem allergic to compensating highly skilled professionals that demand six figure incomes. My guess is that highly paid professionals in government are tiny in # and have no union to support them like teachers unions.
Singapore pays its regulators market rates. So if your an IB regulator they don’t bat an eye at paying them 500k a year. If anything your regulators should be some of the highest compensated people in the industry.
A culture of mediocrity just seems build into American government.
March 1st, 2011 at 4:52 pm
We want a real cop on the beat. Real cops get fired for incompetence or negligence. The SEC hasn’t fired anyone for the Madoff mess. Instead, some of the SEC lawyers who ignored red flags on Madoff have gone to the private sector to earn millions lobbying their former colleagues.
We’ll know the SEC is serious about reforming itself when its staff are accountable – when someone gets fired, or when someone is formally banned from lobbying in front of it. Isn’t it appalling that SEC Commissioners regularly meet with former SEC staffers and their clients or employers, the very staffers who missed Madoff? Have those same SEC Commissioners ever met with Madoff victims? When that ugly display of regulatory capture stops, and only when it stops, we’ll know the SEC has changed and we’ll get something for writing it bigger checks.
March 1st, 2011 at 4:58 pm
Here’s a great guy to be the Chief Cop on the beat in the US…
Mike Huckabee: Obama grew up in Kenya
http://www.cbsnews.com/8301-503544_162-20037877-503544.html
…well, he’s sewn up the moron vote.
March 1st, 2011 at 5:24 pm
davver1 Says has it about right. The regulators have to be paid more to regulate than they can make taking bribes from Wall Street crooks. Combine that with welding the revolving door shut and prosecuting those regulators that work as double agents with life in prison and you have the makings of a meaningful watchdog. Then we should put the Wall Street douchbags in prison for serious terms. Since they essentially steal life, maybe life is what they need. If they balk at that, maybe THEY should be sent to secret prisons in the middle east where they lop off body parts for theft and see how they like that.
For those citing Madoff as a failure, maybe, maybe not. I tend to think he was a sacrificial smoke screen being saved for the right moment. All this talk of Madoff being the largest ponzi scheme in history is total BS. Hank Paulson, Little Timmy, GS, Countrywide (how descriptive!), and too many Wall Street crooks to mention rescued by the taxpaying and working citizenry of the United States eclipses Madoff’s scheme by an insane factor of trillion$.
If there’s one thing politicians and pond scum like the Koch’s know how to do, it’s how to use a good ruse.
Anyone seen the ex-governor of NY lately?
March 1st, 2011 at 5:35 pm
A longer professional life, with better pay, would fix the SEC.
As for the current “Republican” party?
How did senile grandparents become such a large voting block?
Clearly everyone who reads this blog has actually got to VOTE in 2012, and drag a friend!
Also, there’s the Koch heads[ Beck, Limbaugh, Palin and Bachmann ], and Fox “News” we need to revisit the law where Fox can LIE and it still be legal. There is a vast right wing conspiracy and it’s against the bottom 99% of us.
March 1st, 2011 at 5:57 pm
I had an idea for a new Tea Party brochure:
- Your child has brain damage from the paint on their imported toy?
- Your medicine is made of sugar and saw dust?
- Your insurance company doesn’t pay per policy?
- Your drink has formaldehyde and anti-freeze in it?
- Your local business poured industrial waste in your back yard?
Call the new high-efficiency government hot line 1-800-TEA-PRTY. Leave a message.
But don’t expect a reply because nobody works there anymore…
March 1st, 2011 at 6:02 pm
@NotQuiteSo
Let me steer you to a GAO report from 2002 where they cite that even in the halcyon days of 2002 SEC workload measures exceeded staffing by 1/3rd.
Your chart says that funding doubled in 10 years, it’s apparent to me that wasn’t enough. . .
http://www.gao.gov/htext/d02864.html
“As reported in our SEC operations report,[Footnote 10] SEC is operating in an increasingly dynamic regulatory environment. Over the past decade, the securities markets have undergone tremendous growth and innovation as technological advances have increased the complexity of the markets and the range of products afforded to the public. Larger, more active, and more complex markets have produced more market participants, registrants, filings, examinations and inspections, legal interpretations, complaints, and opportunities for fraudulent activities.
In our SEC operations report, SEC and industry officials agreed that SEC’s ability to fulfill its mission in such a dynamic environment has become increasingly strained as SEC’s growing workload has substantially outpaced increases in its staffing levels. Specifically, over the past decade, we found that staffing within SEC’s various oversight areas has grown between 9 and 166 percent, while workload measures in those areas have grown from 60 to 264 percent.
Moreover, following the sudden and highly publicized collapse of Enron Corporation and other corporate failures, SEC has been under increasing pressure to ensure that it is equipped to adequately oversee the securities markets and to ensure that investors receive accurate and meaningful financial disclosure, an important part of SEC’s mission to protect investors. In addition, legislative changes such as the Gramm-Leach-Bliley Act of 1999, the Commodity Futures Modernization Act of 2000, and the USA Patriot Act of 2001 placed added demands on SEC’s limited resources. All of these changes have significant repercussions and pose challenges for SEC’s oversight role.”
March 1st, 2011 at 6:33 pm
The SEC was tipped of by Harry Markopolos multiple times in regards to Madoff. They blew him off. Not readily apparent to me how more money for the SEC will ensure this does not happen again. Barry?
March 1st, 2011 at 7:02 pm
Soylent Green Is People Says:
March 1st, 2011 at 4:04 pm
How much of that chart can be attributed to productivity gains and computerization? Yes, you can have fewer workers doing twice the work when you also have better tools to use. The same chart could be used to show the number of doctors to amount of new information on diseases and their treatment.
I forget where it was said but to paraphrase: “Put the head of GS in a PMITA maximum security prison for 6 weeks and all this nonsense on Wall Street will end. ”
My .02c
Soylent Green Is People.
while computerization can do lots of things. i don’t think we have gotten far enough down the path to where it can identify fraud that well. and its not free, there would have been a pretty big bump (and lots of moaning from wall street about having provide the data electronically ) had it been done.
but i do like that last idea. it usually works that way. its why police can actually control traffic better by just being there, than actually doing any thing (its why those cop cars on the side of the road with a dummy actually work).
March 1st, 2011 at 8:11 pm
We are not going to get more competent professionals anywhere in government when the GOP has been waging a war on them for more than 30 years. An entire generation of sheeple have been brainwashed to disrespect and devalue the government and it’s employees at all levels.
It is the mantra of the GOP and the stated goal is to dismantle, defund, and discredit government in all forms.
Now they are going after government employee unions.
And anyone is surprised that government is broken, incompetent, filled with unqualified, under paid and unmotivated people?
Google “Government is the enemy”. Enough said.
March 1st, 2011 at 9:40 pm
The SEC is a damaged organization. I think it has lost the respect of investors and is no longer anything more than a “speed-bump” for securities fraud or criminality.
Its my impression that a significant cause of the problem is that two of the three commissioners during the Bush Administration were not true believers in the mission of the organization. Harvey Pitt appeared to be openly contemptuous of the role of regulators and Christopher Cox was only better by comparison to Pitt. I have read of anecdotal stories of the difficulty of investigators moving cases forward during their chairmanship; if there was any failing however, it must of course be laid at the feet of George Bush (who had a brush with insider trading; if I remember correctly it was investigated by the chairman of his father’s presidential campaign) who was ideologically opposed to regulation.
There is an argument to be made as to the size and nature of the regulatory structure but there is not a reasonable argument as to its necessity. I have heard reductio ad absurdum arguments that posit regulators are unnecessary and market forces, if left alone, will correct the malfeasance.
To suggest that market forces or “the invisible hand” of Adam Smith, can correct market flaws and/or sort out the good from the evil is a fundamental misunderstanding of the concept. I will leave it to Adam Smith as I can not improve on his phrasing:
” it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Market forces work exceptionally well if the actions of the individual also work to the advantage of society as a whole; they work poorly when the converse is true. Arguing that the action of market forces can somehow correct or “solve” criminal, fraudulent or deceptive behavior is naive to the extreme or a mere excuse for ideologically-driven acceptance of theft.
March 2nd, 2011 at 10:58 am
what a ridiculous excuse ,
not catching madoff because of workload ?
are you kidding me ?
how many other over $10 Billion gigs did they have to investigate ?
It is so fucking obvious that some inside the SEC should be in jail .
March 2nd, 2011 at 3:08 pm
Here is an interesting perspective on working conditions at the SEC. This is taken from the “Best Places to Work in Government” report put out by Partnership for Public Service in 2010.
Securities and Exchange Commission
The financial crisis that led to the collapse of several large investment banks and charges of lax regulation of Wall Street have placed the Securities and Exchange Commission (SEC) under a microscope during the past few years.
The SEC’s mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds, and it is responsible for enforcing the federal securities laws.
Even with new leadership ushered in with the Obama administration in 2009, added resources and a series of internal reforms, the criticism, scrutiny and increased workloads seem to have taken their toll on employees, and have shown up in the SEC’s 2010 Best Places to Work scores.
The SEC dropped by 6.4 percent in its overall Best Places to Work score that tracks employee satisfaction with their jobs and organization—the second survey in a row that employees downgraded the financial regulator. The SEC was listed third in the 2007 Best Places rankings, fell to 11th in 2009 and this year plummeted to 24th among the large federal agencies.
The Best Places to Work data show declines in employee perceptions of senior leaders and of their own sense of empowerment. Compared to 2009, the analysis found employees less positive about training and development opportunities, teamwork, work/life balance and strategic management at the agency.
It may not have helped that nearly every division within the SEC has undergone a change in senior leadership since the 2009 Best Places to Work results were released, and that several of the personnel changes were accompanied by major reorganization initiatives.
Despite the infusion of additional funding to help the agency fulfill its many responsibilities, the Best Places to Work numbers reveal a general feeling among SEC employees that they lack the resources to keep up with the demands placed upon them. The percentage of workers who feel they have sufficient resources with which to do their jobs has decreased from 58 to 44 in just the last year.
Nevertheless, leaders at the SEC are optimistic that the next Best Places to Work rankings will reveal marked improvements. They have held dozens of focus groups with employees to try to get a feel for what they can do better. In response to data suggesting workers do not feel the agency is invested in their future, SEC Chairman Mary Schapiro has committed to quadrupling the money allocated for employee professional development.
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I should also note that the SEC has a pay scale that is beyond what regular General Sechedule employees make (and probably why they were regularaly in the top of the best places to work). However, even though they are in a better pay scale, it is still a joke compared to what one can make on Wall Street.
I agree with the poster who noted that 2 of the 3 Commissioners were themselves anti-regulation. You cannot be an effective regulatory agency when the message from the top is that regulations are “unfair” to business. Quadrupling the training budget isn’t going to do jack if the workers are too busy to go to training. Or maybe that is what they want. Let them take weeks of training so that they have less time to devote to regulating.
March 2nd, 2011 at 3:25 pm
OK, sorry for another post, but Barry……….can you please use your pulpit and media appearances to highlight that the real aim of the House proposed budget cuts is to eliminate funding for regulations like Dodd-Frank that they don’t like. That if they get their way the financial regulation that was passed will amount to nothing.
I am not hearing enough about this in the media. The R’s are getting their message out that they want to cut the budget, but as usual the Ds are incompetent at making their case. Of course, when the new 2 week CR runs out,…… if govt shuts down, the SEC will be that much further behind in their workload. Not to mention that Agencies that approve things that will keep people working will be that much further behind as well. Want to get your new drug approved, oops, sorry. Want to get your new power plant up and running, so sorry, not today.
March 3rd, 2011 at 5:55 am
Maybe we need to open the SEC up to free market enterprise. Let anybody who want become a licensed SEC enforcer and pay them with a % of the recovered fines. Let Wall Street be bit.. slapped by the invisible hand. The GOPsters couldn’t possibly be against letting the free market forces take care of it – that would be hypocritical.
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