Financial Regulation and Compliance: How to Manage Competing and Overlapping Regulatory Oversight, + Website

CHAPTER 14 Conclusion

Having served as the Inspector General of the SEC from 2007 to 2012, I issued many of the reports that triggered Congressional criticism of the SEC and federal regulators in general in the aftermath of the financial crisis, including an audit report that detailed the SEC's failures in oversight of Bear Stearns, as well as investigative reports that were critical of the SEC for failing to uncover the Bernie Madoff and Allen Stanford Ponzi schemes. My reports described how the SEC was in a position to halt the deterioration of Bear Stearns and expose Madoff and Stanford's frauds, but failed to conduct competent regulatory oversight. I watched first-hand how Congressional officials excoriated the SEC and its management and heard the whispers about the possibility that the SEC should be abolished.

Yet, in the end, the SEC was not abolished, broken up, or merged with another entity, nor has its structure been impacted in any significant way. In fact, I also watched Congress react to the SEC and regulatory failings by enacting the Dodd-Frank Act, which gave the SEC significant new responsibilities and duties. I recall testifying before Congress on more than one occasion and fielding a question posed by a Senator or Congressman that was predicated upon the assumption that the SEC's failures were related to a lack of resources. It was clear in many Congressional officials' view that if the SEC had just been given more resources, they would have caught Madoff and ...