SEC: Sorry Excuse Commission

The Securities and Exchange Commission: "Don't look at us!"

Not only did the SEC let Hank Paulson talk them into allowing investment banks to leverage themselves, literally, to death. Not only did it stand by while crooked ratings agencies stamped AAA on billions in toxic mortgage bonds. Not only did they allow all that poisonous paper to be sold all over the world. They couldn’t even nail a lying, cheating charlatan like Bernard Madoff for running a Ponzi scheme right under their noses.

Oy.

From a press release put out by SEC chair Christopher “Who Me?” Cox:

The Commission has learned that credible and specific allegations regarding Mr. Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action. I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them. Moreover, a consequence of the failure to seek a formal order of investigation from the Commission is that subpoena power was not used to obtain information, but rather the staff relied upon information voluntarily produced by Mr. Madoff and his firm.

So let’s see. A massive scam was going on for years. There were plenty of warnings about the scam, and the risks to investors. And yet regulators at the SEC relied on “information voluntarily produced” by those they were supposed to regulate instead of, you know, doing their jobs. This all sounds so … familiar:

Particularly galling is the duel of “don’t look at me!” finger pointing between Cox and Congress at the end of this report. Cox claims he’s been “warning” Congress for months about the dangers of “voluntary regulation” while a Senator blames the collapse on “failed leadership.”

At least in this latest case of criminal non-regulating negligence, Cox can’t scapegoat anyone but his own sorry outfit. Investment banks like Goldman Sachs and Bear Stearns definitely bought off Congress and the commission’s hands were tied to some degree by horrendous lawmaking. But when it comes to one guy literally stealing money right out of people’s pockets, there is no one for Cox to blame but himself. Of course … if you really read his statement clearly, you see that he doesn’t blame himself or anyone else on the commission for what’s happened. He blames SEC staff for not ‘recommending’ any of the complaints to the commission for action.

Sigh. For a second there, we actually thought someone in our government was about to *gulp* take *double gulp* responsibility! Imagine that.

PS: Courtesy of Talking Points Memo, here is a bonus video of Madoff essentially laughing about the quaint idea that regulators would ever interfere with his business. Money quote: “I’m very close with the regulators.” Irony, anyone?: