24/7 Wall St.

Down in Washington, a bunch of Congressmen who lost their jobs and bunch of others taking lobbying money under the table for a piece of the bailout fund, are drawing and quartering the SEC.The actions are deserved. The agency never did catch Madoff, even though they visited with him several times. The SEC also helped set up the rules that allowed bank holding companies to increase leverage by using capital from their operating subsidiaries. That leverage nearly caused the ruin of the industry.

The other side of the picture is that the SEC has been walking up the Hill to Congress for years saying it did not have the staff or budget to do its job.

The agency did chase a lot of cases down blind alleys. The stock option witch hunt bagged a couple of executives who used grants to make themselves a lot of money. Of the hundred plus firms that were investigated for the practice, most walked away clean.

The SEC also got the task of looking into short selling. It banned the practice for financial shares for a bit. That did not stop Merrill Lynch from being sold to Bank of America (BAC) or Citigroup (C) being forced to take a huge bailout. Those things probably weren’t so bad, and may have happened any way.

The SEC still have the onerous job of reviewing every public company filing. In many cases, the more complex submissions have to be read and sent back to the firms for changes. Then those changes have to be reviewed. That process can go in circles for several rotations.

The agency also has the privilege of reviewing changes in financial procedures like "mark to market accounting" for banks and oil and gas company reporting requirements.

The SEC handles about 600 enforcement cases a year which run from insider trading to delinquent public company filings. By most counts, the agency has less than 4,000 employees, and that has dropped over the last few years.

Debating that the SEC did not mishandle the Madoff case is nearly impossible. Arguing the the SEC has too many mandates and too few people is at least reasonable.

You get what you pay for.

Douglas A. McIntyre