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Streetcar Line
Cox Exchange
Time magazine last week aimed an utterly counterfactual and intellectually dishonest hit piece against Chris Cox, the conservative former chairman of the Securities and Exchange Commission. It's time to set the record straight -- and, in doing so, to help correct the overall narrative about the current economic crisis. It's a narrative in which conservatives have received short shrift.
For some odd reason, Cox increasingly has become a scapegoat for the credit crisis, and indeed for the whole recession. Simple logic and basic facts refute this blame-casting, as we shall see momentarily. But to get a sense of the general level of unfairness of the attacks against Cox, consider just a few of the flagrant falsehoods in Time's article co-written by Michael Weisskopf, whose general leanings are captured in the title of his 1996 book called Tell Newt to Shut Up. (Please bear with the length of the first example below: It serves as a good case study for how dishonest the Time piece was, with the Time article in turn serving as a perfect microcosm for overall media misinformation about the current crisis.)
The false narrative that has been taking shape about Cox is that he let the SEC's enforcement efforts wither, with supposedly disastrous consequences for the whole economy. The added falsehood is that he further hobbled enforcement efforts through a new rule, as Time tells it, "requiring SEC staff to get authorization from commissioners for financial penalties before settling a case."
In the key passages that serve as the hinge of the whole rest of the article blaming Cox for, well, everything, Time continued:
In fact, [the new rule] quickly created delays and obstacles, so much so that SEC officials often stopped seeking penalties. "It wasn't worth it," a former commissioner says. "All they got was abuse every time they went before the commission and asked for penalties." Some investigations didn't get even that far. Gary Aguirre, a senior SEC lawyer, sought to question the chairman of Morgan Stanley in a fraud investigation but was denied permission before Cox arrived. He later told Congress that his superiors, fearing the banker's "very powerful political connections" in Washington, had delayed the probe, dooming any chance of making a case--allegations that a Republican Senate report later found credible.
Eventually, enforcers at the SEC grew demoralized. One by one, key officials left the agency; Aguirre was fired under Cox. Sensitive cases seemed to lag. Cox has admitted that his staff brushed off "credible and specific" reports of fraud committed by Madoff over the past 10 years and did not seek subpoena power or bring tips to the attention of commissioners.
The clear implication of the Time account is of a deleterious series of causes and effects: as if the rules change by Cox precipitated abuse of honest enforcement staff, which precipitated a Cox-led cabal to fire Aguirre, and in turn to a demoralized staff that caused the failure to catch Ponzi-scheme king Bernard Madoff. Step by step, Cox is presented as the bad guy who kept investigators from unearthing the information that would, by golly, have stopped the whole financial crisis from happening.
That's balderdash.
The dishonesties in Time's account are legion. First, the rules change at issue came two years after Aguirre left the agency, so they couldn't have helped cause him to leave. Second, the rules change, far from causing frequent obstacles, was a minor pilot program used in only nine cases out of hundreds handled by the SEC, and the commissioners actually backed the staff -- rather than "abused" them -- all nine times. Third, Cox had nothing to do with firing the troublesome Aguirre, who announced he was quitting, rescinded his resignation, and then came under full disciplinary review before Cox even joined the agency. Yes, it was a few weeks after Cox arrived that Aguirre finally was fired, but Cox didn't even know Aguirre was there in the first place, much less cause his firing.
A later Senate investigation of Aguirre's firing not only found no fault with Cox, but actually praised him: "We commend SEC Chairman Christopher Cox for his full and complete cooperation…. By making documents and witnesses available, Chairman Cox demonstrated a commitment to accountability and transparency." And: "We also commend the SEC for increased enforcement efforts regarding insider trading, and specifically insider trading by hedge funds, following our investigation."
Finally, what any of this has to do with Madoff is anybody's guess. Madoff's subterfuge had been going on, undiscovered, for nearly 40 years, with the SEC staff fumbling specific allegations against Madoff for six full years before Cox even came on board. Why is Cox, at the SEC for just three years, being blamed for 40 years of investors and SEC staff being fooled by Madoff's fraud? And why was Madoff suddenly shoehorned into the article just then? To even mention Madoff in the same paragraph with Aguirre and an SEC staff supposedly newly demoralized by Cox (and his new rule) is to raise falsely syllogistic innuendo to a scurrilous new journalistic art form.
Now -- why is all this important?
Because only by such misdirection, by finding a convenient conservative scapegoat to feed the narrative of conservative neglect and/or ideologically based obstruction, can the establishment media shift the blame for today's mess onto the whole idea of free markets and onto its advocates. What's at stake here isn't just Chris Cox's reputation, but the popular history that could shape economic decision-making for decades to come.
Time's misuse of the Aguirre incident -- a gentle zephyr, not a tempest nor a Teapot Dome -- was just one example of how the magazine accomplished its smear. The whole Weisskopf article was rife with similar flagrant dishonesties. Cox was blamed for not being at meetings to which he wasn't invited and wasn't needed (or even was wise to avoid). Cox was blamed for allowing Bear Stearns to have a "yawning ratio of debt to capital," even though in the three months leading up to Bear's collapse the firm's capital ratio was between 13. 5 percent and 14.4 percent -- well above the 10 percent cushion required by the internationally accepted "Basel II" standards and by the Federal Reserve's rule for being "well capitalized."
Time further blamed Cox's SEC because it supposedly "didn't urge the bank to improve most of its practices," even though the SEC had worked closely with Bear for a full year to raise its pool of liquid assets from $5.5 billion in February of 2007 to $17.3 billion in February of 2008 and $18.1 billion on March 10 of that year, just four days before Bear collapsed. Again, that was well above, nearly double, the expected cushion -- and it tracked the SEC's treatment under Cox of all five major investment banks, which at the SECs urging had raised their total liquidity pools from $158 billion to $232 billion.
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Rocco| 3.6.09 @ 7:42AM
We need to find a way to get the correct narratives out to the American people. The so-called MSM might as well be Obambi's press office. The lies and distortions they put out would make Goebbels feel proud.
Bill| 3.6.09 @ 9:27AM
When one can't trust the source of the information one should then cancel the subscription. That is exactly what I did and from the statistics looks like thousands of others have as well. News print is going in the tank because of reporting like this example. So if they lose readers they lose advertising dollars and the ones doing the honest reporting, reporting that has some intellectual honesty will be the winners.
Rocco| 3.6.09 @ 10:35AM
Bill,
You are right on the money (no pun intended!) I too have done that, and draw most of my news from the Internet, and much from offshore sites, to get a different take on events here.
Lulu| 3.6.09 @ 10:54AM
Weiskopff and TIME should be sued for spreading disinformantion and smearing Cox.
The last time I saw a TIME magazine in the dentist's office it was about 1/8 " thick.
Anon| 3.6.09 @ 11:20AM
I have no brief for Time, but there are several errors in Hillyer's article.
Hillyer says that the corporate penalty pilot program was a minor program used in only nine cases out of hundreds handled by the SEC, and the commissioners backed rather than abused the staff. New SEC Chairman Mary Schapiro said on February 6,
I am this week taking action to end the Commission's two-year "penalty pilot" experiment, which had required the Enforcement staff to obtain a special set of approvals from the Commission in cases involving civil monetary penalties for public companies as punishment for securities fraud.
In speaking to our Enforcement staff, I've been told that these special procedures have introduced significant delays into the process of bringing a corporate penalty case; discouraged staff from arguing for a penalty in a case that might deserve a penalty; and sometimes resulted in reductions in the size of penalties imposed.
Hillyer asks why Cox should be blamed for SEC staff being fooled by Madoff's fraud. It was during Cox's tenure that a detailed and convincing analysis from an expert in the field, entitled The World's Largest Hedge Fund Is a Fraud, was presented to the SEC. While the SEC should also be criticized for its prior failures to recognize and act on the Madoff fraud, this analysis presented it on a silver platter. Although it happened on his watch, Cox chose to blame his staff, the mark of an ineffective leader.
Hillyer gives the impression that Cox was wrongfully blamed for Bear Stearns's inadequate capital ratio, which he implies was fine. We know that in actuality Bear Stearns had inadequate capital, and an SEC report has shown in detail how badly Bear Stearns was regulated.
Cox did not earn "virtually universal plaudits." He was widely criticized as an ineffectual, do-nothing chairman with few accomplishments to his name.
Hillyer says that Cox bears no blame for the credit ratings agencies. Actually, the SEC under Cox stood by idly as the credit agencies, regulated as NRSROs by the SEC, let "client-friendly" policies undermine the value of their ratings. The SEC finally proposed regulatory changes in July 2008.
This is not a complete list, but this post is much too long already.
Quin| 3.6.09 @ 11:56AM
Anon,
Why are you anonymous? Why not put your name where your mouth is?
As for the credit ratings agencies, Cox started the review in early fall of 2007. From the start it was slated to take the better part of a year. How can he be blamed that events overtook him? Why not blame all the other prior SEC chairmen for DOING NOTHING? Cox smelled a rat but just didn't have time to prove it. He was en route to proving it, though, which is far more than any other SEC chair did.
As for the pilot program, again, the facts are these: It was used in only nine cases -- seven in 2008 and two in the first month of 2009. That's just a simple fact. And on all nine, the Commission backed up the settlement offer.
On Madoff, it was Arthur Levitt who was a good buddy of Madoff who invited him to participate in SEC-related panels, etc., and under whose watch the first Madoff allegations were dismissed. Once staff has started dismissing allegations, it is easier for later staffs to say, "Oh, we've already looked into that; there's nothing there." It is the early investigations, or lack thereof, that set the tone and that are more worthy of blame.
Meanwhile, who cares what Shapiro says? Of course she is going to trash her predecessor; she's a political appointee trying to make herself look good.
Case closed.
Rick| 3.6.09 @ 11:59AM
Anon is "anonymous" for good reason -- he's spinning fiction as fact. Hillyer is dead on that there were only 2 pilot cases in 2009 and 7 in 2008 -- the SEC spokesman confirmed it. They also had more, not fewer, penalties on public companies because of the pilot.
"Anon" says Bear didn't meet capital requirements, but the report he cites says they did. So he's exactly wrong, and Hillyer is right again.
Cox ordered an internal investigation of why Markopolous's leads never got referred to the Commission. That's an objective demand for accountability, not "blaming the staff." And unlike his predecessors, Cox was not a "friend of Bernie."
"Anon" says the SEC stood by idly for the credit rating abuses, but actually Cox went to the Hill in 2006 to get the SEC authority to regulate this industry, then used it fully -- all the internal emails about "it could be structured by cows and we would rate it" came out of the 10-month investigation that he ordered, as did the new rules. Rating agencies were completely unregulated until Congress changed the law -- Cox deserves credit for leadership here.
Bravo to Hillyer for standing up to the Anons of the world.
Ed | 3.6.09 @ 12:01PM
Anon, sorry but Mary Shapiro is probably the SOURCE for the "Time" fairy tale.
The notion that financial markets are "underregulated" is laughable. The "all knowing" government regulators tried to get Citi to buy Wachovia for $1/share until Wells Fargo offered $7/share. Government rules caused this meltdown.
I could go on forever with examples of fools in government screwing up the financial system but I will end with this, THE GOVERNMENT IS RUNNING A PONZI SCHEME, RIGHT NOW, THAT MAKES THE MADOFF THEFT LOOK LIKE CHUMP CHANGE. Care to guess the name of this program?
John| 3.6.09 @ 12:11PM
I think Time magazine probably bottomed out with its asinine global warming cover piece back in April 2006. That's as good a date as any to mark the complete collapse of integrity among the mainstream newsmagazines. It seems that a degenerate education system, including corrupt schools of journalism, is now taking its ferocious toll on the larger culture.
Stan Redmond| 3.6.09 @ 12:39PM
Facts Shmacts. Facts don't sway democrats' endless quest to pin the blame on all the world's problems on George W. Bush and insulate the disastrous policies of Obama, Reid, and Pelosi. And most democrat voters are just too ignorant of the facts and vote based on emotions and feelings. It reminds me of a cartoon from "the Far Side." A dog is being scolded by her owner and the caption says "what they hear" and all the dog hears is "blah blah blah Ginger. blah blah Ginger. blah blah..."
It's the same with many democrat voters. "blah blah Bush and Cox blah blah Obama inherited recession blah blah Conservatives to blame blah blah blah lack of regulation blah blah blah Obama to save 6 billion jobs in all 57 states blah blah blah, Next on American idol!"
Old Guy| 3.6.09 @ 1:10PM
The Time piece does sound like an unfair hit job on a reasonably good SEC Chairman. Mr. Hillyer does an excellent job to refute left wing propaganda. I agree with Mr. Hillyer on every significant point. Here's the problem; there are some things that Cox could be blamed for & doesn't get the blame or talked about.
1) The short sale rules. The market should put an end to it or put limits in place. They're supposed to be running a market, not a casino.
2) Hedge funds - why are they allowed to engage in manipulative practices that would get others in trouble (i.e. - shortselling like the mongol horde sacking Europe). If you want to protect your portfolios for your clients, use puts & sell stop limit orders like the rest of us.
As far as the economy goes, Cox should get no blame & congress should get it all. Congress refused to regulate Fannie & Freddie. Congress and the SEC working together could've demanded greater transparency in market based pricing mechanisms for the mortgage backed securities. It's taking the experts a long time to figure out what's in those things. It was congress that refused to get involved. The SEC cannot usurp authority. Congress must grant it and since all of them were bribed by Fannie & Freddie, well, you know the rest. Our short attention span citizens must demand full transparency & accountability not just for the regulators and corporate boards, but also for the elected officials who fell asleep at the helm.
Todd| 3.6.09 @ 1:19PM
Thanks Quin for defending the good name of Christopher Cox in such a well-written and researched article. Cox was an oasis of integrity and competence in the sewer of corruption and incompetence that defines DC these days. He wasn't perfect but he did the best job he could in such a thankless position. If anyone suggest that if someone else had been in charge of the SEC that this mess could have been avoided, they don't know what they are talking about or just plain lying. In the case of Time, it is certainly both. I used to read that magazine a few years back but they will never get a dime from me again.
Joe| 3.6.09 @ 1:23PM
Once again Quinn is doing the work Chris Cox and the Bush Admin should have been doing. Sticking up for themselves with the facts. Well written and researched. Too bad there are still too many people who wish to be fooled. And I agree, who cares what Shapiro says, the political hack.
One last thing, Quinn for Pres.
whiterb| 3.6.09 @ 2:17PM
Does not Time a serious conflict of interest here ? Is it not true that many of these New York firms lease space at gigantic costs in the Time Life building ? In essence is not some of the bailout money going into Time's own pocket book ? Maybe Wall Street should just move to cheaper digs, say Newark. As a taxpayer bailing out Wall Street and by extension Time-Life with these massive rents and leases I demand better value. I also think a maximum wage of 150k a year for Time Life " workers " is in order, if they accept bailout cash. Republicans and conservatives can have just as much fun as anybody playing the class warfare card.
Anthony| 3.6.09 @ 2:30PM
Look, Time's Weisskopf and Newsweek's Issikoff are two leftist media hacks on different sides of the same MSM coin. Of course Cox is the villian here, other than Bush, who is blamed for everything else, the left needs to find a Republican scape goat to deflect from Barney Frank, Chris Dodd, Fannie & Freddie. The MSM are corrupt; pure and simple. But for the 1st Amendment, their actions would be criminal.
rajones625| 3.6.09 @ 2:39PM
Quinn-
You are both right and wrong to suport Cox.; right to attack a hatchet job based on incorrect facts but wrong to defend him at all! He has presided over the destruction of the wonder that was the U.S. stock market. I write as a former CFTC regulator and still-working stockbroker of decades.
The U.S. stock market used to serve the interests of both Wall Street and Main Street with the regulators serving as fair referees.
The "wonder" was that small and middle-sized investors could participate with the very high expectation that the money they invested would grow along with the underlying companies over long periods. They didn't have to be Bill Gates to create wealth with Microsoft, just participate in risk through our open and public markets, providing the liquidity that a secondary market system requires.
In order for this to work long-term investors had to be the ultimate winners. Not happening!
I'm sure Cox was a competent technocrat, like many Bush appointees and also the President himself and was capable of attending to tasks set before him but was incapable of perceiving the crux of the market destruction.
It was not enforcement but securitazation. There has been a race between the SEC and the CFTC as to which can approve the most new "securities" derived from securities- derivatives ! There has also been a race between the U.S. and foreign exchanges for market share for these derivatives and a race between New York and Chicago for who can trade the most exotic the earliest. All-in-all a race to create a speculator's dream, a poorly understood , cheap and easy way to trade without regard to any fundamentals of investment.
The stock market is now a zero-sum game for quants, hedge funds and Gorilla Traders without the safeguards of either a stock market (uptick rule) or a futures market (daily trading limits and trading halts, positon limits, etc).
No more middle-class wealth creation and Cox was fiddling with whatever while this conflagration raged.
....and don't get me started on the worst derivative of all- the ETF., a betting unit for for traders and a nice business for sponsors and Specialist but that's a whole' nother rant.
Anon| 3.6.09 @ 3:01PM
Quin - I'm not in a position to identify myself. I note, however, that your other commenters don't seem to have meaningful identifiers either. Cox already had significant authority under existing securities laws, as well as de facto authority under the ratings agencies' need to be NRSROs. He could have done much more (though it is true that the full extent of the rating agencies' iniquities was not yet known). With respect to the pilot program, are you really suggesting that only the instances where the staff actually went forward in full meetings matters? There are widespread anecdotal reports, not just from Schapiro, that some commissioners, particularly Atkins, insisted on a high threshold before they would allow a matter to be brought before the commission (and Cox's insistence on unanimity effectively gave any one commissioner a veto). On Madoff, the existence of earlier ineffective investigations shouldn't mean that all later investigations should be ineffective too. And why are you so willing to damn Schapiro on, you must admit, zero evidence? You were certainly much more protective of Cox.
Rick, while it's true that Bear met the lower capital requirements, it didn't actually have adequate capital. Otherwise it would still be around.
Stan Redmond, if you're just going to look at this through a partisan looking-glass you won't learn much. Cox's predecessor, Donaldson, a Republican, was one of the most effective SEC chairmen we've had in years (notwithstanding that he erred badly in lowering investment bank capital requirements, but that wasn't representative of his tenure as a whole). Democrat Arthur Levitt was a good guy and very investor-oriented, but he missed the big picture and ultimately didn't accomplish much.
But maybe I'm writing in the wrong place to make that kind of point.
Quin| 3.6.09 @ 3:02PM
Rajones,
Thanks for your note. I welcome constructive criticism, and your tone was very constructive. Thank you. But I must correct the facts on the crux of your argument: UNLESS I misunderstand what you are saying, this sentence is wrong: "There has been a race between the SEC and the CFTC as to which can approve the most new 'securities' derived from securities- derivatives !"
Cox had no authorities over derivatives themselves, but he openly has called for them to be regulated, and has cast a skeptical eye on all financial instruments associated with them. Again, though, I might be misunderstanding what you mean, so I don't want to overstate my case here. Thanks again.
jr| 3.6.09 @ 4:35PM
Politicians and gubermint agencies have been blind to the fraud and corruption involving Wall Street. Hedge funds in themselves are nothing but gambling. Didn't I read that hedge fund managers made a billion year? Why isn't Obamamama shutting those things down? And who said that General Motors was worth $38 per share less than a year ago? Its actual worth -- $1.45 per share after shaking out the dust. Anyone else lose money in the market since last October? From Wall Street to my local broker - leeches and thiefs.
rajones625| 3.6.09 @ 4:41PM
Quin-
Apologies; I was tired of writng and embarrassed to be taking up so much space ! I was not speaking of unregulated credit default swaps and other unregulated private transactions . I was speaking of those things you and I can own and trade . (I think my construction was wrong in the sentence you quote: how about "....securities derived and created from other securities, known as derivatives." )
Going back years... index funds, stock index options and futures , ETF's- the evolutionary march of things derived from the common root of a "concept " which does not exist in real life , an Index, market-cap weighted to boot. This Index was supposed to represent the "stock market" and then smaller subsets of the stock market and then to the inverse of the stock market and so on.
What are these things ? They are securities. In order to be traded on regulated markets these conceptual things were securitized- reviewed and approved by the regulatory agencies for sale to the broad public. There were early turf wars; you may remember a struggle between the SEC and the CFTC as to which would regulate stock index futures....but why fight when either can just bless new "securities" to regulate as desired. We now have an assembly line of new EFT's and futures rolling out daily, it seems.
Each new evoluntionary step has taken us farther and farther from investment. Proofs? Ask an ETF "investor" which stocks are in the porfolio and what is their weighting. Still they will buy and sell them 6 times a day.
The stock market has been commoditized; the long-term investor is no longer the ultimate winner and is turning away from equities in droves, leaving the field to program trading, shorts, day traders (amateur and pro) and will not come back until a sound regulatory structure is in place. Cox was not up to this understanding and must take responsibility in my opinion.
Pingback| 3.6.09 @ 5:20PM
Web Watch: Best Blog Posts and Columns For the Week Ending Mar. 6 links to this page. Here’s an excerpt:
Oldefarte| 3.6.09 @ 5:34PM
Quin's article is typically outstanding and informative, but [as to the proposition that Cox is the cause/scapegoat for the credit crisis/recession] the problem began 20+ years ago when liberal [mainly Democrats] congressmen began putting political pressure on banks/financials to ignore redlining loan procedures and grant mortgages to uncreditworthy [mainly minority constituents]. The result was subprime, creative financing loans that predictably began going sour recently, and which neither Cox or God almighty could have then prevented from imploding. If bankers would have given THE FINGER to these liberal politicians and followed their time honored loan underwriting rules and regulations, this now credit/real estate crisis and recession/depression would be managable. The problem has always been, and will continue to be, liberal Democrats whose only mantra in life is to take the income/assets of hard working, tax paying Americans and give same to career, cradle-to-grave welfare seekers!!!!!!!
Pingback| 3.6.09 @ 10:02PM
Cash Back Credit Cards - Cox Exchange - Spectator.org « Cash Back Credit Cards links to this page. Here’s an excerpt:
Grant| 3.7.09 @ 8:22AM
The article cites that Cox and others suffered abuse from the Commission every time they sought penalties in a case, but never mentions who is on the Commission and why they were abusers. We now know that the Bush administration had gotten wind of the problems with the mortgage markets, but chose to ignore them and let it ride - anything to support Bush's cronies that he primarily identifies with. Bush's mentality has been to structure the system so his super rich buds can ravage it like a pornstar would a nymphomaniac, and to hell with the costs. And regarding the spending of the Clinton and Bush administrations that the writer refers to, there is one gargantuan difference in the conditions present under each administration: Clinton ended his reign with a surplus, while Bush immediately squandered it rather than pay down debt. Then he exacerbated the situation to give in to his and others lust for death, the lust that some boy-men get from war that somehow assures them that they are the ultimate of men. Well look at you all now... if you can.
whiterb| 3.7.09 @ 10:08AM
Grant, the Clinton surplus was a phantasm. It included a ridiculously low military budget, indeed they looked ahead and saw only peace and the end of history as we know it and all of that. It had a zero expenditure for homeland security, remember they perceived terrorism as a routine law enforcement issue, no doubt solved by those " 100,00 " new cops on the street . And Blubbering Bill was always going on and crying about the lack of a prescription drug benefit, but never sacrificed a dime of his 200 billion far as the eye can see to pay for a single aspirin. Sorry buddy boy but the bear trap of reality clamped down mean and hard on you as you try to spread that little bit of bull crap. . You can't run with it anymore, at least among those with a clue. As for who is to blame ? Well how about the" greatest treasury secretary of all time(according to Chris Matthews)" ? He seems to have played a major public and private sector role. Yes, the great Robert Rubin.Could it be that are so called " best and brightest" are neither ? Look at the Obama Crew ? And, the MSM. I think the best and brightest still are in medicine. But, wait to the current crop of chattering class frauds get their mits on that last bastion of excellence.
DaveS| 3.7.09 @ 12:36PM
'Time' is still considered a magazine? I dropped 'Time' when they had a full-page presidential-like full-length photo of Faye Wattleton as part of a fawning article. Only TAS is worth the expenditure these days.
The Obama salad days are coming to an end. And if the market upticks from its current tank level, they'll be saying, "See! It's working!"
Please.
edward| 3.7.09 @ 12:44PM
Great column Quin.
Grant:
Thanks for the Democrat talking points - these kind of discussions always need some humor.
Anyone who has followed the credit crisis in the media has already seen the videos of Barney Frank, Chris Dodd and many other Democrats defending against any more regulation of FM & FM.
It was Bill Clinton that signed into law the dismantling of Glass-Steagall with what was known as the "Citigroup Authorization Act" because it was Treasury Secretary Robert Rubin who was the driving force behind it.
Here is what Bush did for the rich: http://www.heritage.org/Research/Taxes/images/chart6_lg.gif
And please point out these imaginary Clinton budget surpluses (hint learn what Intergovernmental Holdings are):
National debt:
1993 - $4.411T
1994 - $4.693T
1995 - $4.974T
1996 - $5.225T
1997 - $5.413T
1998 - $5.526T
1999 - $5.656T
2000 - $5.674T
2001 - $5.807T
Marc Jeric| 3.7.09 @ 12:53PM
I escaped from a communist country in 1957; after 5 years in France as political refugee I finally came here in US. After a few years of reading American press I started calling the NY Times the New York Pravda, The Washington Post I called the Washington Izvyestiya, etc. So nobody should be surprised with that Time shody piece of communist propaganda.
Who funded Hitler| 3.7.09 @ 4:52PM
The communist was invented by someone, Nazism was invented by someone, all the various political claims was invented by Jews, like Zionism which is the same as Nazism. The same as it was when they introduced Slavery in America. Americans was happy with the KKK, like they are happy to kill the Palestinians, and sponcer terrorism. America is dead by it's own evil, they claim they are not racist, but they have never been more racist. Anti- semetic introduced by racist, to cover and gain control of the world.
Osamas Pajamas| 3.7.09 @ 8:43PM
Media malpractice / media malfeasance / media stories freighted with fraudulence, which add lies to and subtract truth from the public debate. They deserve to be overthrown, immediately, but how? If they are boycotted and lose money will they be rewarded with tax-money bailouts? How to put them out of business --- any ideas, anyone?
jack| 3.8.09 @ 7:27AM
As a conservative I am shocked by this article. Cox was a complete incompetent. He is not as guilty as Barney Frank , Countrywide 6,or Dems who wanted everyone no matter their credit to own a home but Cox was a disaster.
Letting the Uptick rule go was a real factor in stocks being attacked by shorts. Cox never enforced the Naked shorting rule which has also been abused to crush stocks. Cox didnt shut down Stanford months ago when it was apparent it was a scam. Maffoff should have shut down during Clinton years but that is no excuse for Cox ignoring a very obvious scam.
The SEC under Cox gave Wall Street firms the OK to up leverage on mortgage instruments from 3-1 to 30-1! That is complete incompetence and ignorance. Free markets are one thing but legalized rape of US taxpayer is another.
chet brewer| 3.8.09 @ 11:02AM
You have a good argument until you look closely at a couple of "facts" that you used to refute the Newsweek article. First the senate report you site was a preliminary report that was issued by the strongly republican senate in early january 2007 before the rebalancing of the senate with the seating of the senators elected in 2006. The final report issued in late 2007 did not support the firing.
Mr Cox is taking the heat because he led the agency that is supposed to oversee the investment industry and failed miserably in that task. Everything may not be his fault, but he was the leader and needs to take the heat, man up and deal with it.
Chris| 3.8.09 @ 12:15PM
Awesome and insightful discussion no matter which side one might be on. Thanks so very much to the author and the commentators! Keep up the great work. Facts do matter.
dan gaffney| 3.8.09 @ 1:08PM
Mark to market is a major problem. The SEC blew it as far as securitzed mortgages are concerned. How can you price a portfolio of securities where the buyer has no idea of the underlying assets?
Why wasn't there full disclosure of what assets were in the portfolio of mortgages?
Isn't that the SEC's purview?
Andrew| 3.8.09 @ 1:23PM
The simple fact is that under Cox the SEC looked the other way during the greatest failure of securities regulation in history. Those who tried to enforce the law were discouraged or, as in the Pequot case, fired. The persistent failure to enforce settlement regulations to prevent naked short selling and market manipulation was a major contribution to the meltdown.
Amdog| 3.8.09 @ 3:32PM
Ok, here is the dirty secret or the 800 lb. elephant in the room. We fret for Mr.Cox because some blog shill slams him. We are under serious attack .We are watching a caste, cartel or collective destroy our system. The patterns of behaviour are not difficult to discern. The handbook is Alinsky as clarified by Cloward-Piven. Simply,they will continue to fiddle (read as obfuscate,ignore,mislead),while we burn(read as the Limbaugh crisis,Cox crisis,Pelosi-Reid non sequiturs). Before you read or listen to anything from the main stream media,search their name and see if you can't find amazingly small, social circles. Hint: Eastern-European backgrounds, educated at Harvard,Northwestern, and Columbia abound. This breed created small cells of less fortunate minions to create "crisis centers".It is that combine who are now dictating our peace of mind. If we do not begin to cite the fact that somewhere between 1.5% and 5% are manipulating us, we are imbecilic. We are waiting once again for a tragedy to force us into action.
transparency. I love my country.
jeffk| 3.9.09 @ 8:30AM
The left has been on the look-out for scape-goat since Bear Stearns collapsed on March 14, 2008. In fact IF they had a Republican too hang this around they would have within seconds.....the media wolf pack would have chased him or her to the end of the earth.
The left has had control or a stop gap (help from weak Republicans) in the House and Senate since 2004 - o6.
Republicans were warning about this, BUT they were blocked by the Dems (Frank and Dodd).
This is a Democrat ression, the housing collapse hang on the Libs like a scarlett letter, since Carter you could read the wrighting on the wall. This economy is Obamas, and the democrats.....Bay'Rock, no matter how much he and the Clinton lackies screw-up, The "O" is TO BIG TO FAIL....
Mr. Cox, is their first attempt at "the Scape-Goat". the real question is: Will the Repulblicans stant tall in the face of this Alinski style attack"
WM| 3.9.09 @ 11:00AM
Cox may have done a good job at all those other things--I do believe you on that--but at the end of the day, he implemented and defended the mark-to-market rule, and that caused the crisis. I say again: The mark-to-market rule caused the financial crisis. It is not true that it merely exacerbated the crisis (and if it's not "exacerbated," then it's not a crisis anyway). Virtually all of the losses have been mark-to-market losses, not failure of the asset itself. The assets are actually performing very well, even to this day, contrary to liberal propaganda.
I have read the SEC defense of the mark-to-market rule. It was complete and utter crap and should be dismissed in its entirety. It should be regarded as another application of the old wisdom that government reports are not objective and cannot be trusted. First, they studied mainly small bank failures, not the investment banks and other large commercial banks where the vast majority of our wealth was lost, causing the collapse. For the two mega banks they actually did look at (including WaMu), the data was again extraordinarily clear: The vast majority of their losses were caused by mark-to-market.
I have also read Gelinas' piece. It starts off with a conclusion, that the mark-to-market rule is right, and then defends it so thoroughly and articulately and from so many angles that it transforms mediocre thinking into profound mediocrity.
The mark-to-market rule is destructive and immoral.
Tom| 3.9.09 @ 12:54PM
One could make the argument that Mr. Cox was complete failure or a great success purely based on political associations. While that leaves out many technicalities, the fact is that Mr. Cox was at the helm when Wall Street sank. I am neither an economist nor financial expert, but I am a conservative America loving guy and see the DJIA hovering around 6.6k and unemployment above 8%. Someone once said "The buck stops here." If the job was oh-so difficult, Cox should've turned down the offer. He had been in government since the late 80s. This was NOT an unseasoned individual who was "pushed" into taking a job he could never dream of becoming as important as it did. I am also sick of hearing that the Bush administration "tried" to stop Fannie and Freddie. He had the White House and Congress and still could not stop the largess? What else to do need? A direct line to God himself? I don’t know enough about the details that Quin illustrates to debate them, but I do know that I’ve learned more about financial market than I ever wanted to in the last year or so. For me it started when I was home in Germany and one of the “Landesbanks” ended up on the block because of bad practices. The international exposure of Wall Street’s shenanigan’s was apparent quickly. Cox is the guy to deserve all the criticism that is coming his way for not coming out swinging against previous Glass-Steagall action, Madoff, 30-to-1 leverage and all the other things happening on Wall Street. We have here another Harvard educated self-absorbed elitist who was looking to pad his resume. Didn’t quite happen… Find me a damn politician who wants to serve instead of lining his pockets. I’ll concede that Mr. Cox technically may have tried the best he could, but fundamentally he took the job and this mess is his (PERIOD).
rc whalen| 3.10.09 @ 8:00AM
It is a shame that people focus on the SEC's enforcement "failures," another example of Washington's mindless idiocy. Regulation is always after-the-fact. The liberal belief in the efficacy of regulation has created the present mess. And now the Dems offer us more regulation. I was disappointed in Cox's tenure at SEC, but for reasons mostly beyond his control.
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