How to really reform the SEC

Dan Smolin asks a good question: Why should we assume that the SEC's Mary Schapiro will make a U-turn in 2009, given that Schapiro has spent her entire career inviting brokerages to "self-regulate" and doing everything in her power to keep consumers at bay when they are ripped off and kept in the dark by brokerages? The easy answer is that we shouldn't assume that Schapiro will all of a sudden go to bat for the consumers. After all, Schapiro "has been at the very center of a failed regulatory process for the past two decades." We know where her loyalties lie, just like we know that Tim Geithner will never turn hard against Wall Street to clean up the corruption (see here for more details on Geithner--and here). Truly, years of actions speak much more loudly than months of words for both Schapiro and Geithner. I am convinced that Obama doesn't have the horses he needs to clean up Wall Street corruption. It's a typical modern conundrum where you need a highly motivated powerful outsider to get the job down, but there simply aren't enough highly motivated powerful outsiders. If Mary Schapiro had even an iota of interest in protecting consumers, Smolin wouldn't be needing to advocate for the following changes he is now pushing--they would have been a reality years ago:

1. Abolish the mandatory arbitration system and give investors back their constitutional rights;

2. Abolish "self regulation" by FINRA, which is a sham. The brokerage industry should be regulated by a governmental authority with the power to do so effectively. The SEC would be the likely agency to do so, with the right leadership;

3. Require brokerage statements to:

(a) Disclose the risk of every portfolio, as measured by standard deviation; (b) Compare the returns of every portfolio to a portfolio indexed to benchmarks of comparable risk; and (c) Disclose the "cost equity" of the portfolio, which is the amount the investor must make to break even, after payment of commissions, fees and margin interest. Common sense, right? Why aren't these reforms a reality? Good question. And why is a terribly motivated person like Mary Schapiro still sitting there pretending to be a reformer?

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Frank Rich: It’s time to dig up Bush’s buried bodies

Frank Rich has just written an article pointing to a wide variety of Bush Administration scandals about to be revealed. He urges President Obama to let the information flow because there is a momentum to the process and it is, in fact, inevitable. The strangest one, in my opinion, is Donald Rumsfeld's private bible quote laden newsletter. Strange and revealing, though not at all surprising. Rumsfeld's newsletter, entitled Worldwide Intelligence Update, was:

[A] highly classified digest prepared for a tiny audience, including the president, and often delivered by hand to the White House by the defense secretary himself. These cover sheets greeted Bush each day with triumphal color photos of the war headlined by biblical quotations. GQ is posting 11 of them, and they are seriously creepy.

Take the one dated April 3, 2003, two weeks into the invasion, just as Shock and Awe hit its first potholes. Two days earlier, on April 1, a panicky Pentagon had begun spreading its hyped, fictional account of the rescue of Pvt. Jessica Lynch to distract from troubling news of setbacks. On April 2, Gen. Joseph Hoar, the commander in chief of the United States Central Command from 1991-94, had declared on the Times Op-Ed page that Rumsfeld had sent too few troops to Iraq. And so the Worldwide Intelligence Update for April 3 bullied Bush with Joshua 1:9: “Have I not commanded you? Be strong and courageous. Do not be terrified; do not be discouraged, for the LORD your God will be with you wherever you go.”

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As If We Didn’t Know

Politics dictated FDA policy? Say it isn't so! According to this NY Times piece, the Bush Administration (they get the blame because, after all, he was the Decider) bade the FDA to meddle with contraception when it suited a certain agenda. What I find so delightful about this, as with the Dover PA decision on Intelligent Design in the classroom, is that a Republican judge, this time a Reagan appointee, made the call. The thing is, contraception and all that it implies really ought to be a conservative issue. I mean, really---it has all the hallmarks of the last 60 years of conservative philosophy built on the rights of the individual, the freedom from interference being chief among them. You would think conservatives would have leapt on this a long time ago, staking it out as exemplary of the idea of American Individualism and the freedom to act as a moral agent, dictating one's own destiny and making determinations about how one will live one's life free from government meddling. Handing both men and women the tools---provided by the free market, to boot---to manage their own lives in accordance with their formulation as individuals of the American Dream should have been a slam dunk for conservatives. They should have been cheering for it since the days of Margaret Sanger. What is more, given the attitude of the communist states, which dismissed Sanger and the entire notion of family planning as a bourgeois, capitalist plot to undermine the growth of the collective, this should have been part and parcel of rearing a generation of people cumulatively opposed to Soviet style socialism and collectivism. Everything about the Choice movement smacks of good ol' fashion American Values! It is the perversity of the debate that is ironic, that it should be those who are castigated as liberal soldiers in the march to socialism and its destruction of all things individualist and true blue American who are the champions of the idea that people ought to have full say in the when and if of having children. How did this happen?

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Frank Rich: Rod Blagojevich is a small fry in our metastacizing culture of corruption

Rod Blogojevich is not a big fish by any means.   Most of the big fish remain nameless and free, according to Frank Rich of the NYT: What went down in the Land of Lincoln is just the reductio ad absurdum of an American era where both entitlement and corruption have…

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