Fox Requests Better Security on Henhouse

I must say it takes a lot of nerve for SEC Chairman Chris Cox to write an Op-Ed calling for better regulation of the Derivatives Market. As I have pointed out recently, Cox’s appointment to head the SEC was part of a clear Bush/Cheney plan to neuter any enforcement of bad actors in the market. Cox looked the other way when his subordinates told him Bear Stearns was way overleveraged and continued to abide by his voluntary enforcement plan of reserve limits. Now he has the balls to say we should be regulating derivatives, when Phil Gramm , john McCain and other Republicans like Cox fought tooth and nail to keep derivatives unregulated.

Even more indicative of the Bush Administration view about law enforcement and the financial industry is that repeated requests from the FBI to restore some of the 1800 agents that were moved from the white collar crime division into counter-terrorism, were denied by the White House.

Interviews and internal records show that F.B.I. officials realized the growing danger posed by financial fraud in the housing market beginning in 2003 and 2004 but were rebuffed by the Justice Department and the budget office in their efforts to acquire more resources…

Several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.

A little chilling of corporate risk taking might have been a good thing in 2003 and 2004. In fact it might have prevented the current crisis.

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0 Responses to Fox Requests Better Security on Henhouse

  1. Dan says:

    One aspect of the “war on terror” (that phrase always sticks in my craw) has always been that, as with the “war on drugs,” huge amounts of law enforcement resources can be transferred from areas that some might consider uncomfortable to other areas that allow politicians to grin and tell their constituents that now, yes indeed, we are fighting the good fight.

    The advantage of the “war on terror” over the “war on drugs” is that it allows much wider opportunities for off-the-books, covert operations, in the name of keeping villains from murdering your children in their beds. Those off-the-books operations can lead to all kinds of interesting possibilities for the Dr. Strangelove True Believer who thinks that American security, peace, justice, truth, godliness, killing heaps of foreigners, and fattening his own bank account are essentially the same thing.

  2. MD Fatwa says:

    That’s a little unfair on Cox, don’t you think? First, the “voluntary” enforcement plan (which was a regulatory plan, not an enforcement plan) was voluntary because the SEC lacked the legal authority to make it mandatory. The only reason the entire system was set up (which, admittedly, the SEC botched) was because the European Union insisted that large American investment banks be regulated by a single regulator (or else they would have to set up an umbrella company in Europe to regulate the banking and securities business together). Prior to that, the Fed regulated the banking side of things, and the SEC regulated the brokerage side.

    Also, criticizing Cox for the sins of Gramm is guilt by association. I’ll be the first to go after mindlessly deregulatory Republicans (with former SEC commissioner Paul Atkins first on my list), but the greatest fault I can lay on Cox is that he was too willing to seek consensus among the commissioners. But, even there, when there were only 3 commissioners, he had no choice, since all three were needed for a quorum. (Piss Atkins off, he doesn’t show at the meetings, and nothing gets done.)

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