Can we put an ass-kicking skeptic in charge of the SEC?
The SEC has proven its dysfunctionality. Instead of being on top of the banks for misconduct, it consistently sets the price for it at below cost. Instead of examining suspicious records to root out Ponzi schemes, it ignores whistleblowers.
I think it’s time to shake up management over there. We need a loudmouth skeptic who is smart enough to sort through the bullshit, brave enough to stand up to bullies, and has a strong enough ego not to get distracted by threats about their future job security.
My personal favorite choice is Neil Barofsky, author of Bailout (which I blogged about here) and former Special Inspector General of TARP. Simon Johnson, Economist at MIT, agrees with me. From Johnson’s New York Times Economix blog:
… Neil Barofsky is the former special inspector general in charge of oversight for the Troubled Asset Relief Program. A career prosecutor, Mr. Barofsky tangled with the Treasury officials in charge of handing out support for big banks while failing to hold the same banks accountable — for example, in their treatment of homeowners. He confronted these powerful interests and their political allies repeatedly and on all the relevant details – both behind closed doors and in his compelling account, published this summer: “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.”
His book describes in detail a frustration with the timidity and lack of sophistication in law enforcement’s approach to complex frauds. He could instantly remedy that if appointed — Mr. Barofsky is more than capable of standing up to Wall Street in an appropriate manner. He has enjoyed strong bipartisan support in the past and could be confirmed by the Senate (just as he was previously confirmed to his TARP position).
The idea that only one of Wall Street’s own can regulate Wall Street is deeply disturbing. If Obama keeps Walter on or appoints Khuzami or Ketchum, we would be better off blowing up the SEC and starting over.
I still believe the best person to lead the SEC at this moment remains former New York Governor Eliot Spitzer. He would fearlessly hold Wall Street accountable for its past sins, as he did when he was New York State attorney general and as he now does as a cable television host. (Disclosure: I am an occasional guest on his show.)
We need an SEC head who can inspire a new generation of investors to believe the capital markets are no longer rigged and that Wall Street cannot just capture every one of its Washington regulators.