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costa's hummer

Wednesday, December 24, 2008

Do Nothing Awards


Christopher Cox, the embattled chairman of the Securities and Exchange Commission bristles at the enormous criticism that is being leveled at him during the current economic meltdown.  "Hey, the public should be patting us on the back right now.  While others have been running around willy nilly looking for solutions, we have stoically sat back and done nothing.  It takes real courage to sit on your haunches and look serious and actually be doing nothing.  Anyone can take the easy "activist" route.  Instead, we cut our enforcement staff back to one guy and tried to even encourage him to take a little time off.  You know, markets will police themselves."

Not to be outdone, his counterpart at Treasury, Henry Paulson, spoke up. "Hey wait a minute - we created a $700 billion no strings attached bailout for the banks and they haven't loaned one thin dime to the American taxpayer. Don't lecture us about indolence. With any luck we'll give our next holiday gift to the commercial lenders. They don't have any union members, do they?"

Ben Bernanke at the Fed is a celebrated academic whose expertise and ssholarship is in economic meltdowns. "Yeah, the ship is sinking, but this is gonna look swell in my next book!"

It's nice to be on the receiving end of the kind of leadership we are seeing out of Washington. Bush and Co. are setting a high mark for lazy ineptitude that may never be eclipsed. Muck things up really bad for the Schvartse, we will just rearrange the deck chairs on the Titanic. Americans are so stupid, in four years,  simply rewrite the historical narrative and blame it on the democrats.

Brilliant!

What Cox actually said yesterday - "What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants," Cox said. This caution, he added, "has really been a signal achievement for the SEC."

Taking a swipe at the shifting response of the Treasury and Fed in addressing the financial crisis, he said: "When these gale-force winds hit our markets, there were panicked cries to change any and every rule of the marketplace: 'Let's try this. Let's try that.' What was needed was a steady hand."

Many do not view his role so charitably - From the Washington Post:

Although Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades. And they say that Cox's stewardship before this year -- focusing on deregulation as the agency's staff shrank -- laid the groundwork for the meltdown.

"The commission in recent years has handcuffed the inspection and enforcement division," said Arthur Levitt, SEC chairman during the Clinton administration. "The environment was not conducive to proactive enforcement activity."

But former officials said enforcement has suffered during his tenure. A pilot program begun last year required enforcement staff to meet with the commissioners before beginning settlement talks in certain cases involving non-financial firms. Some former officials said the change was just one example of new bureaucratic impediments that slowed enforcement work. The commissioners also made clear that they thought staff members were being too aggressive in some cases, the officials said.

"I think there has been a sentiment communicated to rank-and-file staff, lawyers and accountants that you don't go after the establishment," said Ross Albert, a former special counsel in the enforcement division.

Another staffing shift was underway at the Office of Risk Assessment, formed by Cox's predecessor, William H. Donaldson, to spot emerging problems in the financial markets. But under Cox, the office, which once had slots for seven people, eventually dwindled to just one. "That office withered away," said Bruce Carton, a former SEC enforcement lawyer. "It died on the vine under Cox."

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