One of the best kept secrets in Washington is the working of the Securities and Exchange Commission. Does it get the job done? Not even close.
Typically, Wall Street is awash in insider trading, accounting games, and let's not forget campaign contributions -- and SEC lawyers are outgunned and outmaneuvered. All this was known before the Bernard Madoff scandal put the SEC to shame and dozens of kiss-and-tell best sellers were published by ex-financiers who, having stashed away enough for themselves and their dynasty of future children, came forward with sordid tales of pocket stuffing.
The agency may have been weak throughout the Bush years, but it's not just the way, it's the will. Back in '93, in Clintontimes, Mary Schapiro told an audience in Switzerland that "a more flexible regulatory paradigm" would benefit the financial world. And she wasn't alone: over at the White House, chief economist Bob Rubin was saying the same.
Rubin, who cashed out of Goldman Sachs with hundreds of millions of dollars, and his lieutenant, Larry Summers, who made millions at a hedge fund, went on to run the Treasury Department. There, this dynamic duo unleashed the forces not of regulation -- but its reverse -- laying the foundation for the awful mess we are familiar with -- speculation upon speculation and leverage upon leverage -- producing profits galore but few jobs.
Even the best intentioned SEC, under the the reformed and revitalized Mary Schapiro, can put but a dent in a system so skewed. The case against Goldman's juicy, but juicier to investors are the bank's first quarter returns -- which are up. It'll take more than Ms. Schapiro's lawsuit to topple the applecart of massive accumulation for some and next to nothing for the rest of us.
The F Word is a regular commentary by Laura Flanders, the host of GRITtv which broadcasts weekdays on satellite TV (Dish Network Ch. 9415 Free Speech TV) on cable, and online at GRITtv.org and TheNation.com. Support us by signing up for our podcast, and follow GRITtv or GRITlaura on Twitter.com.