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.