It wasn’t someone at Bear, Stearns or at Lehman Bros. They were doing what they do, or at least doing what they have been doing since 2000. It wasn’t Alan Greenspan, although he had his share of responsibility.
No, and it wasn’t Bush, Cheney or Hank Paulson. Bush and Cheney are responsible for everything, not just the Recession. They caused 9/11, two wars, ENRON, the looting of California, the looting of the National Parks, the gasoline crisis, the lack of work on global warming, the lack of response to Katrina, to Darfur, and to the hatred of us by the Muslim countries. They sent jobs overseas, allowed pitiful conditions in VA hospitals, corrupted Congress, encouraged hate speech, encouraged 32,000 lobbyists in Washington and added another $5 trillion in debt.
But the guy responsible for the Recession is
If you are out of work, it is Chris Cox’s fault. If you lost your pension, get in Chris Cox’s face about it. If Bernie Madoff took all your money, go see Chris Cox and ask him what he will do to get it back for you. Chris Cox was the head of the SEC. He was the man responsible to blow the whistle on bad investments, on cheating investment firms, on illegal short selling, or on ponzi schemes. But he not only did nothing, he was much, much worse.
As head of the SEC, Cox should have been on the lookout for financial fraud. That was his job. His job was to make sure that the kinds of things that happened…never happen. Cox made it his job to inhibit investigation of his pals on Wall Street and their lobbyists, guys he knew from years of pandering to them as a member of Congress. His Right Wing agenda was to slow down investigations as much as possible, and when an investigation was completed and action needed to be taken, he saw to it that it was delayed, postponed or never enacted.
Cox’s procedure was to have an investigator, in order to open a case, meet with the five-person, Neocon-controlled commission, which they insured was at least a month and often longer. Then, once approval was given, the investigator had to research the case using dilapidated equipment, not updated since before 9/11 or, as often happened, actually go outside the agency for administrative support. This all took time.
When an investigation proved that action was warranted, Cox saw to it that each action required review by eight separate levels of approval. At the end of the process, a fine would often be reduced or completely eliminated. Legal action might not even be taken because the process could take so long that the situation had changed. Cox’s management, according to SEC staff was designed to reduce effectiveness as he was also reducing staff. For example, at one point 5,000 cases of illegal short selling were considered and not one case was pursued.
While these working conditions, including less competitive pay, and in an obvious situation where Cox was slowing the process, many investigators left the agency. Many of those positions were not filled. The result was a drop by two-thirds in legal actions against companies who were perpetrating fraud against the public. Cox cut enforcement staff to the bone, having fewer attorneys in house than the individual legal staffs of some investment banks that he is supposed to oversee. His 2009 budget called for another reduction in staff of 94 attorneys.
All the while he continues to smile and pretend to be concerned for sufficient regulation while he has clearly done more than any previous head of the SEC to stifle regulation. Of course we now see how that turned out for the public. In fact, the risk assessment division, that area of SEC authority that is designed to evaluate and avert potential disasters, which was designed by the previous SEC chairman Donaldson to have 15 staffers was never filled, with Cox assigning only no full-time staffers and only the part-time equivalent of two full time investigators. And we wonder why we had a major Recession and almost had the greatest Depression ever…if in fact we are climbing out of it.
Chris Cox is a typical, arrogant, greedy, unapologetic Neocon who served his lobbyist masters as he was directed by Dick Cheney. He left the People high and dry. He says that he was not able to anticipate the real estate bubble. But others were. Many others, including Dr. Paul Krugman of Princeton, who wrote about the dangers of a real estate bubble regularly in the New York Times, fully a year before it happened. It is easy to understand how some people who had a vested interest might have continued to ignore warning signals. But it was Cox’s job to watch for them. It is pretty clear that he saw them and simply deliberately ignored them which led to the kind of disaster we experienced in the fourth quarter of 2008.
Very often Cox would pull an investigation at the last minute, employees said. It happened regularly. After an investigation had been completed, legal action was necessary and the commission had approved it, Cox would pull the case. (This of course immediately begs the question: why? Was there a quid pro quo? This, in itself seems like a very worthy investigation, in light of what happened in the markets.)
Tough enforcement actions were watered down by key managers at Cox’s insistence, SEC staffers maintain. And several top enforcement officials were passed over or discouraged from staying with the agency because they were considered too tough on Bush-Cheney friends in Wall Street. In the Biovall and Tenet cases, particularly in the Tenet health care Medicare fraud case, Cox and the SEC Neocon Republican members of the commission did not prosecute for fraud and settled for pennies on the dollar compared to what the staff had recommended. Soon after, the head of the Los Angeles office, who had handled the investigation and prepared the case, resigned.
During his presidential campaign in the fall of 2008, John McCain called for Cox to be fired. McCain had inside knowledge that the markets were collapsing and wanted to get ahead of the curve. Cox had allowed banks to be leveraged 40 to one instead of 12 to one. In other words banks and the non-regulated financial institutions that Cox let run wild needed only one dollar of capital for each $40 that they owed or lent out. They were a disaster waiting to happen and Cox knew it. He was a corporate lawyer before he was a Congressman and on the finance committee long before he was Chairman of the SEC.
In the old days out west, where Cox is from, they would just tell someone to watch him while others went out to find a rope and an appropriate tree. But then others would say–why waste a perfectly good rope on someone like him?