I picked up the Financial Times this morning. Like the Wall Street Journal, it has a series of short paragraphs (blurbs) in a column on the left-hand side of the first page. The top one was headlined: “Tennessee Bank Agrees (sic) Settlement With SEC.” It went on to describe how Morgan Keegan, a Tennessee investment bank, had agreed to pay some $210 million to resolve a series of charges by the SEC that he had defrauded investors in five bond funds by inflating the value of mortgage securities during the financial crisis.
Eight blurbs down, another headline appeared: “Regulators Attacked.” The paragraph then described how Mitch McConnell, the senior Republican in the Senate, is backing attempts to block funding increases for the SEC. The article quotes McConnell as stating his belief that starving the agency “would be good for our country.”
Is anybody paying attention to what is going on here? How would it be good for the country if the SEC had lacked the financial wherewithal to pursue its claims for the fraudulent conduct committed by Morgan Keegan? Had there been no action by the SEC, this investment bank would have been able to skate free, despite perpetuating a massive fraud costing hundreds of millions of dollars to investors? How would that have been good for the country? And how would it be good for the country to limit in any way the ability of the SEC to enforce rules that are intended to protect investors, whether they are individuals or institutions, including public and private pension funds? The only beneficiary of “starving” the SEC in this instance would have been one investment bank, Morgan Keegan. When last I checked, Morgan Keegan is not the country.
Everybody had better wake up. The laissez-faire deregulated approach to business that led us to financial catastrophe, and which Alan Greenspan has admitted was the wrong course, remains the centerpiece of the Republican Party. These folks need to be voted out of office and their hands taken off the steering wheel. Now that would be good for the country.