The Role Of The SEC And What's Needed To Keep Watch On Wall Street
http://thedianerehmshow.org/shows/2012-11-28/role-sec-and-whats-needed-keep-watch-wall-street
Mary Schapiro took over as chair of the Securities and Exchange Commission in 2009. The nation was in serious financial crisis and Wall Street seemed to resemble the Wild West in need of a strong sheriff. Many saw Schapiro as that sheriff and credit her with salvaging the agency's role as Wall Street's watchdog. Critics point to unfinished business, such as addressing the root causes of the financial crisis and punishing the perpetrators whose actions contributed to it. A discussion of the role of the SEC and its future under new leadership.
Guests
Mary Schapiro
chair, The Securities and Exchange Commission.
Tom Gorman
co-chair of the American Bar Association's securities fraud subcommittee; former SEC enforcement official; partner at Dorsey & Whitney.
Dina ElBoghdady
reporter, The Washington Post.
Bartlett Naylor
financial policy advocate, Public Citizen, Congress Watch.
Comments
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SEC, typical government agency, an over compensated rest home for the incompetent. No one gets fired, they just move on as if nothing has happened. Business and government working hand in hand, a liberals dream.
"The US Securities and Exchange Commission disciplined eight of its employees Friday for not stopping Bernard Madoff's multibillion-dollar Ponzi Scheme after repeated red flags, reported the Washington Post. None of them were dismissed, though a ninth employee resigned before disciplinary actions were issued.
The employees faced a range of punishments, including suspensions, pay downgrades, demotions and reprimands, according to USA Today.
The Wall Street Journal reported that a 2009 report by the SEC's internal watchdog called into question 21 of the agency's employees for their work with Mr. Madoff despite numerous whistleblowers who warned of Madoff's scheme"
I learned someting as a teacher. A second grade student once told me. "Sir if we don't have rules for the game, the bullies do what they want."
The SEC isn't incompetent, it's tasked to look the other way for fear of dampening economic vitality. It's real purpose is to seduce small investors, especially, into a false sense of security. The real crux of the problem is the lack of financial savvy and courage in Washington. The pressure to let half-truths and even outright fraud pass by is just too great for our dissolute government officials. It's no accident the greatest concentration of millionaires in the US is around Washington.
SEC was probably the "third agency of government" that would have been gone if Rick Perry had won. Ron Paul would definitely have killed it, said it does nothing but give people a false sense of security so they are quicker to part with their money.
Partisan has an interesting take on reality. According to him the SEC of the period before 2009 was a "liberals dream". I find that interesting because that was when we had a "compassionate conservative" appointing members to the SEC and the Treasury Dept. Back then it was about putting business leaders in charge of regulatory agencies. How did that work out for us?
"liberals" want to see rules enforced.
@jmcmck
Without real (non-Randian) regulation, investing money is like gambling at a casino.
Actually, scratch that. A casino has a reputation to protect, and makes the most money when its games are straight up honest, and folks trust it enough to return to it.
Whereas our shyster financiers only need to sucker each of us John and Jane Q. Publics into their game of three-card monte once.
Former lead investigator in the Savings and Loan scandal Professor William Black and other experts have said that Attorney General Eric Holder has every tool necessary in his justice bag to prosecute the Wall Street fraudsters. Can your guest discuss why Obama and Eric Holder have not prosecuted any of the Wall Street banksters. So if the SEC does not have prosecutorial powers but the Dept of Justice does. Enough of the excuses.....
Wow, the program barely got underway and Mary Shapiro was already gone. What a joke!
One of your guest was saying we shouldn't be locking CEOs up. He claims it's the "culture" that can't be attributed to any one person. He's wrong. That "culture" doesn't exist in a vacuum. The policies come from somewhere. The direction and action from then top comes from somewhere. Lock up the people at the top and the ones on the bottom will fall in line.
Funding has been an SEC problem, but the mix and quality of its workforce is an even bigger one.
The SEC has been traditionally overstaffed with young lawyers eager to prove themselves talented enough to get noticed by large private firms, and lured away with large pay packages. The young SEC investigator who asked Bernie Madoff for a job is just the most glaring example.
The SEC staff is under-represented by older, very experienced forensic accountants and financiers who have worked inside Wall Street firms and were either forced out for refusing to compromise their ethics, or left in disgust. These are the people who, if permitted, could build strong cases against fraud based on witnessing the typical course of fraudulent events. And they cannot be compromised by big offers from outside firms.
Much of the illegal activity began when these former partnerships became corporations. No longer holding individuals responsible.
Wall Street represents the corporate culture. The definition of a corporation is "Individual profit without individual responsibility'.
As long as a the corporate charter exists it is imposible to regulate, or prosecute individuals under corporate law.
We have big problems as a society and as a species, but as long as we value individual profit over the comman good of our species and our planet we are on a path to self destruction.
It is my opinion that this is a reflection of our basic biology as a species and not very changble As Pogo said long ago in the comics "I have seen the enemy and he is I" -many a truth is spoken in jest
Quote: "It's the LAW"
The law is designed to operate in the fashion it has.
Lawmakers on talk shows in Virginia like to say, "I'd love to help you, but it's the law." What do lawmaker's do? Virginia lawmakers just give you the above line.
As to findings of culpability, those conditions are designed in as well, by lawyers, marketers and lobbyists. There fore one needs to pay lawyers, specialist lawyers, to find error. Dickens and even Conrad wrote stories that cover the details of these scams.
And, how can you find culpability if one claims they 'just believed' what they were told. One would have to have professional standards and licenses that could be recinded. State of the Art for Marketers, and Marketing degrees, is State of the Art 'Selling their Product' by any means. And Caveat Emptor.
State of the Art in Plastic Surgery, and in all surgery, has nothing to do with Ethics, only with Means
edwards wrote: "Ron Paul would definitely have killed it, said it does nothing but give people a false sense of security so they are quicker to part with their money."
It does!
I have to scratch my head at your inability to appreciate the truthfulness of Ron Paul's words.
I can't help but think that some sort of tax on transactions should be levied to pay the tax payers back for what this whole thing cost us. After it's all paid back it can go into a rainy day fun for the next time and we know that there will be a next time.
Guests have not addressed the role of the organizations who rate the quality of securities. Bad decisions were made based on bad information and over inflated ratings provided by these organizations.
If corporations are people than can't we just place all of the persons within the corporation in jail?
If the police raid a house containing contraband then everyone inside are deemed to be involved.
Diane,
There is a simple response to the problem of "institutional" responsibility for financial misdeeds. Unlike the poor individual who robs a 7-11, the death penalty is appropriate for these institutions - coupled with an aggressive "claw back" from all the employees. Yes, there will be broad consequences from such a draconian punishment, but the behavior must be discouraged.
Mopinoin wrote:
If corporations are people than can't we just place all of the persons within the corporation in jail?
If the police raid a house containing contraband then everyone inside are deemed to be involved.
So if the company you or your loved ones work for does something illegal you would just happily go off to jail even though you or they had no decision making responsibility. Lets assume this is the case. You would be on this forum complaining that upper echelon did wrong but the janitor is going to jail for it as well. Please think before you type.
Arnold Harrison wrote:
Diane,
There is a simple response to the problem of "institutional" responsibility for financial misdeeds. Unlike the poor individual who robs a 7-11, the death penalty is appropriate for these institutions - coupled with an aggressive "claw back" from all the employees. Yes, there will be broad consequences from such a draconian punishment, but the behavior must be discouraged.
Good point, unemployment isn't high enough, this is a great solution and next we can arrest all workers in a union when the unions do something wrong, and when the government does something wrong we can arrest the whole country. Do you people have any critical thinking capability?
I have to say that you are grossly misinformed on the make-up and experience of current SEC staffers. After working as a legal intern, I can say from experience that the SEC is far from "overstaffed with young lawyers eager to prove themselves talented enough to get noticed by large private firms, and lured away with large pay packages." Nor is it "under-represented by older, very experienced forensic accountants and financiers who have worked inside Wall Street firms and were either forced out for refusing to compromise their ethics, or left in disgust." Very few members of the enforcement staff are under 35 and most have employees have worked in the financial sector or for big firms in the past. The draw of working for the SEC is the work-life balance, the quality of the people working there, and the desire to bring transparency to our markets. As a soon-to-be law school graduate, I can assure you that it is nearly impossible to get a job in the SEC's enforcement division without substantial litigation experience (which new grads obviously do not have) so really not many young lawyers trying to prove themselves. Additionally, while people may leave the SEC for big firm jobs, you'd be amazed at how many return to the SEC because they miss the atmosphere and work they did while at the SEC. When it comes down to it, SEC employees are public servants, doing their best with limited resources to protect the investing public from fraud. They are limited by their lack of criminal authority along with budgetary, political, and policy issues. Granted every Federal Agency has people that under-perform, and those people unfortunately will stick out, but those people are the exception, not the rule.
There should be a much bigger discussion of "regulatory capture", when the regulators wind up working for the companies that they should be regulating.
In New Mexico CenturyLink hosted a dinner on the eve of an annual session of the Legislature. It took all of the legislators to dinner at a world-class club (2 Jack Nicklaus golf courses). As mentioned this morning, the Legisture funds the Public Regulation Commission. Somehow, the New Mexico Legislature has done very little to empower the Public Regulation Commission!
In addition, CenturyLink (a couple years ago and probably today) had an employee that spent 4 days a week roaming the halls of the Public Regulation Commission and taking various PRC staff members to lunch.
"Regulatory capture" is all too human. We should develop systems to deter so much lobbying!
"kathleen wrote:
Former lead investigator in the Savings and Loan scandal Professor William Black and other experts have said that Attorney General Eric Holder has every tool necessary in his justice bag to prosecute the Wall Street fraudsters. Can your guest discuss why Obama and Eric Holder have not prosecuted any of the Wall Street banksters. So if the SEC does not have prosecutorial powers but the Dept of Justice does. Enough of the excuses.....
November 28, 2012 - 10:18 am"
No Prosecutors, no Investigators, no Judges, no nuthin. Three-Fourths of the Bush Justice Dept devoted to covering up the Bush Crimes, both Domestic, against the American People and International against much of the rest of the World and leaving the bones for Obama to dispose of.
And how are the Obama, Holder, Clinton and Rice keeping busy these days?
Trying to tamp down a purely 100% fabricated "scandal" with active support of 99% of both the Jew and Gentile Media.
Still not as bad as Fast and Furious in which the Rats were willing to expose a Bush ROGUE OPERATION, outside of any supervision or oversight, in order to embarass Obama.
Constant allusions to assassination from the Jarheads, the NRA/Klan Hillbillies, Judge Mucasey and the Wall Street Journal.
And Professor Black didn't do such a great job on the S&L Scandal, leaving the Bush Rats free to go on to deep involvement in the current cesspool.
Three Generations of the most corrupt Family in the History of the Republic. Three Generations of Bank Robbers, Liars, Butchers, Traitors and Common Thieves.
I say, Pi_s on Professor Black and Pi_s on you, Kathleen, you are getting to be as much a pain as the eggie Gang.
Monte Haun mchaun@hotmail.com
mnemecek wrote:
Arnold Harrison wrote:
Diane,
There is a simple response to the problem of "institutional" responsibility for financial misdeeds. Unlike the poor individual who robs a 7-11, the death penalty is appropriate for these institutions - coupled with an aggressive "claw back" from all the employees. Yes, there will be broad consequences from such a draconian punishment, but the behavior must be discouraged.
Good point, unemployment isn't high enough, this is a great solution and next we can arrest all workers in a union when the unions do something wrong, and when the government does something wrong we can arrest the whole country. Do you people have any critical thinking capability?
November 28, 2012 - 11:12 am"
WTF are you blabbering about?? I think Arnie was using some kind of literary device. Ask Linguist eggie to explain it.
Arnie raised some valid points.
When a Ponzi Scheme collapses, all the payouts should be immediately clawed back and redistributed to all the Investors, instead of the early ones winning big and latter ones getting boiled.
Furthermore, Bankruptcy Courts don't have to handle the Rats with Kid Gloves, but strip the scum of their Bonuses and other emoluments they stole on their way to the Courthouse then put them out of business for good.
Monte Haun mchaun@hotmail.com
Why have federal prosecuters not invoked the RICO act in the case of the mortage scandal. It certainly proved efective in the Michael Milken case, promting him to immediatly plead guilty to a number of lesser charges to avoid RICO. It grabs their attention.
Corporate Capitalism doesn't work anymore. We need to junk the old jalopy instead of having half the passengers admiring the hood ornament and the other half blaming it for our running out of gas. Most all the commentators on air and on this page are too hung up on woulda/shouda payouts to consider any real solutions. Monte Haun is the exception. He sees a Jew behind his every frustration. What is this? Weimar Germany? Get real, Obama and Holder can't do anything because they are the butler and the footman. I can hear their masters" voices. They sound like the muffled trumpet of adult gibberish raining down on the Peanuts gang. Anyone living in fear and uncertainty can be bought. Witness obedient Morsi waiting on his $5 billion dollar IMF loan. "I will do what Hillary says. I will do what Hillary says." Some fruit vendors and a Nile boatman will pay the interest for eternity if we don't dismantle corporate fascism.
"A man is as purchasable a commodity as coffee or sugar."--John D. Rockefeller, Sr.
So you can bet there are some wealthy dudes trying to spread a little "folding green" in the SEC.
"Pancake Rankin wrote:
Bluejays were my favorite bird. It was West Nile Virus killed them here in McAdenville, NC. And Climate Change brought West Nile. As much as I'm outdoors on our conservancy and hiking and biking and kayaking I saw only one this summer, probably the last Bluejay, over the Fourth of July."
I hate Bluejays, they kill large numbers of Songbirds. You are also full of Cr_p about West Nile.
Too bad you didn't get off your rear long enough to check out my many comments on West Nile and Plum Island.
No Jews were harmed in writing those comments.
Monte Haun mchaun@hotmail.com
mchaun wrote:
mnemecek wrote:
Good point, unemployment isn't high enough, this is a great solution and next we can arrest all workers in a union when the unions do something wrong...
November 28, 2012 - 11:12 am"
As a matter of fact, Numchuk, that is exactly what they do.
In a big Virginia Coal Strike, the Company blew up a tiny abandoned tool shed worth about $200 and a crooked State Judge single-handedly nearly broke the UMW.
The same UMW that was silent during the Romney Blitz of abominable lies about Obama and the problems in the Coal Fields.
Monte Haun mchaun@hotmail.com
November 28, 2012 - 2:32 pm
Hi, The hurt and pain of losing my home in Atlanta, GA will always stay with me. It was a heartbreaking experience and still is. Not being able to get my money back hurts even more. Eugenia Renskoff