SEC = Shallow Exposure Capability

Step 34 in "Love My Country, Loathe My Government" is one of the most important steps in the whole book. Given that the political class has rigged the political processes via gerrymandering Congressional districts, opposing term limits, controlling primary processes, and controlling election money sources, it is virtually impossible to defeat an incumbent once they are in office. Step 34 would help stem the tide of incompetence in Congress by removing them from committee and subcommittee posts for failure to do their job to at least minimal standards of performance. For example, under Step 34, all of the politicians sitting on both the House and Senate Intelligence committees would have been replaced after the 9-11 attacks killed almost 3,000 Americans and those committee members failed to protect those 3,000.

The SEC is the title of this post and would almost certainly be affected by Step 34. Anyone sitting on the Congressional committees that oversee and advise the SEC would have been replaced for any number of events in the past 10-15 years. It was the SEC and their Congressional committees that somehow missed some of the biggest corporate frauds in history in the 1990s when they allowed companies such as Worldcom and Enron to perpetuate accounting fraud for years, destroying the careers, pay checks and retirement funds of thousands of Americans.

More recently, it was the SEC and their Congressional committees that somehow missed probably the biggest Ponzi scheme ever, the scheme Bernard Madoff had run for so long. Hundreds of people lost untold millions of savings over a long period of time. Thus, it appears that the SEC has had some pretty "shallow exposure capability" for a long period of time, running at least as far back as the Clinton adminstration for the 1990s accounting scandals through the Bush adminstration and Madoff.

The most frustrating thing about this government incompetence in exposing Madoff's fraud is 1) it went on for so long, 2) it was so far reaching, 3) we paid for this incompetence with our tax dollars and 4) how hard could it have been to expose these schemes? A February 4, 2009 online CNN article (and reported in other news sources) covered the Congressional testimony of Harry Markopolos, an independent financial fraud investigator. According to his testimony, Mr. Markopolos did a detailed Madoff scheme analysis over nine years ago and he "sent detailed memos, listing dozens of red flags, laying out a road map of instructions for SEC investigators to follow, even listing contacts and phone numbers of Wall Street experts whom he said would confirm his findings." In this case the SEC did not even have to do the legwork and analysis, it was already done for them! Unfortunately, the SEC did nothing with his work and the fraud went on for another eight years or so.

The really sad aspect about this case and the ineffectiveness of the SEC is that Mr. Markopolos claimed that it only took him about four hours of analysis work to prove his case of fraud. He did what the entire SEC and at least two Congressional committees could not do. What does that say about the political class sitting on those committees? Under Step 34, they would be the poster kids for getting kicked off their respective committees for incompetence.