No Cops On The Beat At The SEC

Little by little the American people are learning that the government rather than regulating Wall St., in the years prior to the near collapse of the world economy, was in fact turning a blind eye to their abuses. And rather than holding the profiteers accountable, the government instead came to their rescue. Conclusion: the real culprit was not Madoff, who just used the system, but the people who's job it was to police Wall St.

I'm sure that if Barney Frank's House Committee on Financial Services had extended hearings on the role of regulators before and during the financial meltdown, there would be grave revelations that would underscore the government's fundamental failure to police Wall Street.

What's particularly astonishing about the fine work Inspector General Kotz did is that even Madoff felt he would be found out any minute, despite making it through six pathetically irresolute investigations into his crooked dealings. Where were you when we needed you, Stanley Sporkin, former enforcement director at the SEC? The report lets us know that former SEC Chairmen Christopher Cox, William Donaldson and Arthur Levitt, and top commission staffers including the former director of enforcement were "generally unaware" of the six investigations of Madoff until he was arrested in December 2008. Given Madoff's notoriety in the investment community and the charges he might have been running a massive Ponzi scheme, it's truly distressing for an investor who wants to have faith in the soundness of markets to learn that the top ranks of the SEC were never informed. Shocking!

And it looks like nothing will be changing any time soon:

One year after the collapse of Lehman Brothers, the surprise is not how much has changed in the financial industry, but how little.

Backstopped by huge federal guarantees, the biggest banks have restructured only around the edges. Employment in the industry has fallen just 8 percent since last September. Only a handful of big hedge funds have closed. Pay is already returning to precrash levels, topped by the 30,000 employees of Goldman Sachs, who are on track to earn an average of $700,000 this year. Nor are major pay cuts likely, according to a report last week from J.P. Morgan Securities. Executives at most big banks have kept their jobs. Financial stocks have soared since their winter lows.