02/09/2009 05:12 am ET Updated May 25, 2011

When it Comes to Bernie Madoff, Congress is More to Blame Than the SEC

My question of the day is, "Why is Congress having hearings to investigate the Securities and Exchange Commission?" If it's looking for the real culprit to blame in the Bernie Madoff Ponzi scheme, Congress needs only to look in its collective mirror.

Before I became a "recovering attorney," I practiced law for 15 years, several of them as an enforcement attorney at the SEC. I was ready to fight fraud! I was ready to investigate! I was ready to take on the bad guys!

Reality, however, didn't take long to set in. My new business cards were barely back from the printer when I realized that the SEC staff is always fighting an uphill battle and would never be able to truly protect investors and fight fraud in any significant way. The bureaucracy was too overwhelming, the procedural hoops too daunting and the staff would never have the resources it needed to do the job the right way.

Why? Money and influence. Two things the SEC needs and has little of. Two things that corporations and investment bankers have in buckets. Remember Enron? WorldComm? Den of Thieves?

The tag line of the SEC has long been "the investor's advocate." But the agency's effectiveness has been taken apart piece by piece because of the ridiculous beliefs held by many that self-regulation in the economic marketplace was a logical thing. Even Alan Greenspan is now shocked that he was so wrong for so long about his theories that ultimately replaced the initial premise of why a federal securities regulator was needed -- to compel corporations to tell the truth their securities and to make brokers, dealers and stock exchanges put the interests of investors first.

The SEC's noble purpose was probably doomed from the start. Sure, it can keep an eye on some things going on in the markets. But as a relatively small federal agency, it has always been underfunded and understaffed. The odds have been stacked against the Commission when it comes to keeping corporate greed at bay.

On top of that, many people who decide to work there do so to develop an area of expertise so they can leave in a few years and go make the real bucks in the private sector. The SEC suffers from constant turnover and loss of institutional knowledge. A great case might be underway, but if the attorney who's worked on it for two years leaves, someone else has to pick it up and learn it all over again, delaying an investigation or putting it on the back burner permanently.

The world that the SEC regulates knows that and counts on the perennial lack of resources and staff turnover. The individuals and corporations I investigated did everything they could to stall and draw out the process, by contesting subpoenas for documents and testimony they knew they would eventually have to comply with or by complaining to my supervisors that I was on the wrong track, in the hopes that I would either leave or get bored and frustrated and move on to another case.

So as Congress is getting ready to point the finger at the SEC for falling down on the job and searches for the underling who will inevitably have to take the fall, it had better get ready to own up to its share of the blame. Congress decides how much money (and, therefore, power) the SEC gets, and I can tell you it's standard practice for Congress to whittle away at the agency's budget or to say it can hire many new attorneys, but then refuse to fund the positions.

There have been a few who have tried to change things to make the playing field more level. But they've failed. The corporations and entities that are regulated spend much time and money on lobbyists to protect their interests, not the interests of the investors. SEC attorneys don't have their own set of lobbyists; they only have their own personal motivation and professional pride to see things through. That just isn't enough.

The SEC needs some sharpened fangs, not just a new set of ill-fitting dentures, if anything is going to really change for investor protection. Even though Congress claims it's serious this time, I'm not holding my breath that the money for that trip to the regulatory dentist is going to happen any time soon.

Joanne Bamberger is a professional writer and political anaylst in Washington, D.C., and the founder of the political blog, PunditMom. She is also a Contributing Editor for Politics & News at BlogHer. Her commentary has appeared on CNN, Fox News, BBC Radio, and many others.