McCain's Goofy Attack on SEC's Cox

Holy hypocrisy! John McCain is blaming Christopher Cox for the Wall Street meltdown and wants him fired.

The would-be president says that the chairman of the U.S. Securities & Exchange Commission has been asleep at the switch.

McCain's political ploy raises many questions about his own understanding of how regulation works and what his own role in it has been.

First, let's rewind back to 2005. William H. Donaldson, former head of investment firm Donaldson, Lufkin & Jenrette, had been SEC chief. Nominated by George W. Bush, Donaldson was deemend untenable by Republicans such as McCain. Why? Because he threatened to rain on Wall Street's parade by supporting regulation of hedge funds, backing more shareholder influence and keeping a watchful eye on mutual funds. Even worse, he tended to vote at times with Democratic SEC commisioners.

Wall Street wasn't amused. So, Donaldson went and Cox, a free market conservative from Orange County, Calf., was selected. Cox had authored legislation to make it harder to regulate financial markets and many feared that he'd be a push-over for business.

McCain participated in the unanimous Senate vote confirming Cox who has said he wants out from the SEC next February.

To be fair, Cox hasn't been a sop for business, but there are some questions about his vigor in enforcement.

The SEC under Cox saw a decrease in budgets for enforcement. They dropped to $298 million in 2007 from $316.3 million in 2005, according to news accounts. Turnover remained high at the SEC, but then, turnover is typically high at the agency because many bright, young lawyers and accountants move on to higher-paying jobs in the private sector after getting their tickets punched. This is not new.

The SEC claims that the agency has scored some major hits, including several big money penalties against securities law violators. One was Fannie Mae which paid a penalty totalling $400 million.

And Cox held firm and did not follow Big Business's script, such as somehow delaying Sarbanes-Oxley implementation or exempting small business from it.

Cox may also be a victim of his nice guy personality which stands in stark contrast to Treasury Secretary Henry Paulson's sleek, shark-like persona.

Meanwhile, Donaldson, whom McCain helped evict, had been making unhelpful noises after his departure, such as his 2007 warning that the overall lack of regulation of the financial industry could lead to a Great Depression disaster. That's what Bill Moyers noted on PBS.
Cox is an easy target for McCain and he is the wrong one. Where was John all those years when the deregulation train was gathering steam in the Senate?

(Image by Chris Dunn via Flickr, CC 2.0)