Enforcement begins against financial corruption
Marion Edwyn Harrison, Esq.
Free Congress Foundation
Coincidences in history and life are manifest and far outnumber conspiracies.
Some, of course, are irrelevant, even to an amateur philologist.
In that category is the fact that three aggressive personages sharing a surname beginning with the letter "S" are leading charges to improve long deficient federal enforcement of honesty in financial dealings. They are Senators Charles E. Schumer and Richard C. Shelby and newly installed Securities and Exchange Commission Chairman Mary L. Schapiro.
That Sen. Schumer is a strong liberal Democrat and Sen. Shelby a strong conservative Republican is relevant and potentially very helpful in that they are working together in sponsoring remedial legislation. Although this writer agrees substantively far more often with Alabamian Shelby than with New Yorker Schumer when, as often, the two of them disagree, this writer has considerable objective admiration for each - aggressive, astute, competent, courageous.
Chairman Schapiro’s record is less clear. Many have applauded her for her "clean-up" work when she headed the Financial Industry Regulatory Authority, successor to the National Association of Securities Dealers, although New York Attorney General Eliot L. Spitzer, at the time vigorously prosecuting, criticized her for alleged ineffectiveness. However, upon balance, it would appear her qualifications and willingness to enforce are worthy.
The Schumer-Shelby proposed legislation is sweeping. In sum, it would authorize creation of a phalanx of additional federal enforcement jobs - namely, 500 FBI agents, 50 assistant U.S. attorneys, 100 commission personnel. Those numbers at first blush seem large.
It obviously would take a minimum of several years prudently to fill such vacancies with qualified personnel even if appropriations were available quick-like-a-bunny rabbit. However, speaking generally, the need for effective enforcement is imperative and the numbers may be realistic.
According to recent congressional testimony, the commission informally was warned over a period of some 10 years about activity of the now infamous Bernard Madoff. The commission did nothing. That example is the most dramatic, maybe not the most significant.
A - perhaps "the" - major difficulty has arisen because of political infighting as to choice of individuals to be nominated and confirmed as commissioners. This commentary several times has addressed that subject, most recently on Jan. 28, 2008 column reprinted (less its introductory paragraph).
This clearly is a time in which sustained substantial success in reducing financial corruption is not only warranted, but essential to the recessional economy. Go to it, Senators Schumer and Shelby, Chairman Schapiro and all in any level of authority.
Marion Edwyn Harrison is president of, and counsel to, the Free Congress Foundation.
Below is the reprinted column:
Free Congress Foundation Commentary
The Regulatory Agency
Vacancy Deficiency - Worse Yet
By Marion Edwyn Harrison, Esq.
Jan. 28, 2008
The Securities and Exchange Commission by law is to have five commissioners. Three come from the political party of the President of the United States, two from the other party. As of this writing, there are three Republican and one Democratic commissioners.
Two days hence, barring the unforeseen and unlikely, the lone Democrat, Commissioner Annette L. Nazareth, will have resigned, with nobody nominated, much less confirmed, to succeed her.
In November 2007 the Senate Majority Leader forwarded to President George W. Bush - that is, through the usual channel within the White House - the names of two individuals proposed by the Democrats either of whom presumptively would be acceptable for confirmation. One already is a federal official and, hence, had undergone the usual background check. The other, an attorney in private practice, presumably had not. A background check, of course, even if highly prioritized, can consume considerable time.
There can be no doubt these two background checks, if the White House seriously is considering nominating these two individuals for the two vacancies, should be of utmost priority.
Depending upon which economist’s evaluation one accepts, the United States either is in a recession, in the incipient stages of a recession or in high risk of a recession. The commission regulates, to the substantial extent there is federal regulation, the securities market. If ever there were a time when the commission should be fully staffed and fully functioning the time at best is now, at worst was many months ago.
The president, candidates for presidential nomination, members of Congress, economists, media, all manner of people, are talking about "stimulus" for the burdened economy. Staffing may seem like mere procedure. The reality is that, regardless of what "stimulus," if any, is enacted into law, motivated by the Federal Reserve Board, provided by banks and/or otherwise attempted - maybe even effectuated - at the least the one federal agency which regulates the securities market should be fully staffed and fully functional.