Steffy on Swaps

"Let's say you're driving down the road and three wheels fly off your car. How do you get rolling again? If you're Treasury Secretary Henry Paulson, you take a knife and slash the one remaining tire. ... The ensuing eight months have refuted the report's thesis of streamlined federal oversight. At every turn, state regulators have been the only friend for consumers and investors. It was the states, as my colleague R.G. Ratliffe norted earlier this week, that forced banks to make good on auction-rate bonds they sold to investors, often under false pretenses, when the market collapsed in February. It was the states that backed class-action lawsuits against subprime mortgage peddlers, such as Ameriquest and Countrywide, forcing the companies that bought them, Citigroup and Bank of America, respectively, to modify loans for beleaguered borrowers. ... When it became clear that the murky market for credit default swaps needed transparency, it was the state insurance commissioner from New York who stepped in, declaring what Congress had danced around for years: the swaps are insurance and need to be regulated as such. ... The SEC itself has seemed largely oblivious to its role of investor protection, a finding underscored in an inspector general's report on the agency released late on the Friday after Thanksgiving. Damning in its findings, the report portrays an agency rife with potential conflicts, including improper ovesight to prevent SEC employees from trading on insider information. In other words, it's the SEC itself that's ripe for reform. ... In fact, his plan is nothing more than a shill for Wall Street, which would have to love to see state regulation weakened, leaving the SEC and the self-regulatory arms of the stock exchanges as the primary enforcers", my emphasis, Lorey Steffy at the Houston Chronicle, 10 December 2008, link: http://www.chron.com/disp/story.mpl/business/steffy/6156405.html.

I note the PCAOB is an arm of the SEC. I think it's worse than the SEC, focusing on insignificant cases and ignoring larger issues. I've posted on the SEC and PCAOB many times. As they currently operate, they're jokes.