Scandalous Cuts at S.E.C. Proves "Scary Deficit" Crowd Fraudulent - Strauss-Kahn Scam Exposed Along With Celebrating Israelis In Moving Vans

If you weren't sure already about the way the Rethugs have utilized their new-found (waaaaay after the Cheney/Bush Trillions of Dollars Unaccounted For Deficit Spending and Long-Term Debt Incurred on Wars and Tax Breaks for the Rich Decade) "fear of government debt" (and adding to the current deficit) only to screw the poor (95% of the population) who depend on Social Security/Medicare/Medicaid, think hard about what the 'thug cutting of the budget of the S.E.C. for investigation of the banksters and enforcement of the laws means. We'll purposely bring back the Madoffs Who Have Been Made Good.

(Out on the street again. Contributions are always welcome. Bad times ahead.)

July 15, 2011 As a Watchdog Starves, Wall Street Is Tossed a Bone By James B. Stewart The economy is still suffering from the worst financial crisis since the Depression, and widespread anger persists that financial institutions that caused it received bailouts of billions of taxpayer dollars and haven’t been held accountable for any wrongdoing. Yet the House Appropriations Committee has responded by starving the agency responsible for bringing financial wrongdoers to justice — while putting over $200 million that could otherwise have been spent on investigations and enforcement actions back into the pockets of Wall Street. A few weeks ago, the Republican-controlled appropriations committee cut the Securities and Exchange Commission’s fiscal 2012 budget request by $222.5 million, to $1.19 billion (the same as this year’s), even though the S.E.C.’s responsibilities were vastly expanded under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Charged with protecting investors and policing markets, the S.E.C. is the nation’s front-line defense against financial fraud. The committee’s accompanying report referred to the agency’s “troubled past” and “lack of ability to manage funds,” and said the committee “remains concerned with the S.E.C.’s track record in dealing with Ponzi schemes.” The report stressed, “With the federal debt exceeding $14 trillion, the committee is committed to reducing the cost and size of government.” But cutting the S.E.C.’s budget will have no effect on the budget deficit, won’t save taxpayers a dime and could cost the Treasury millions in lost fees and penalties. That’s because the S.E.C. isn’t financed by tax revenue, but rather by fees levied on those it regulates, which include all the big securities firms.

A little-noticed provision in Dodd-Frank mandates that those fees can’t exceed the S.E.C.’s budget. So cutting its requested budget by $222.5 million saves Wall Street the same amount, and means regulated firms will pay $136 million less in fiscal 2012 than they did the previous year, the S.E.C. projects.

Moreover, enforcement actions generate billions of dollars in revenue in the form of fines, disgorgements and other penalties. Last year the S.E.C. turned over $2.2 billion to victims of financial wrongdoing and paid hundreds of millions more to the Treasury, helping to reduce the deficit.

But the S.E.C. has become a favorite whipping boy of those hostile to market reforms. Admittedly the agency has given them plenty of fodder: revelations that a few staff members were looking at pornography on their office computers; a questionable $557 million lease for new office space, subsequently unwound; and the agency’s notorious failure to catch Bernard Madoff. Nonetheless, in the wake of the recent Ponzi schemes, evidence of growing insider-trading rings involving the Galleon Group and others, potential market manipulation in the still-mystifying flash crash, not to mention myriad unanswered questions about wrongdoing during the financial crisis, the need for vigorous securities law enforcement seems both self-evident and compelling.

A bribery scandal at Tyson Foods — a scheme that Tyson itself admitted — resulted in charges against the company earlier this year. But no individuals were charged. While the S.E.C. wouldn’t disclose its reasons, the case involved foreign witnesses and was therefore expensive to investigate and prosecute. The decision not to pursue charges may have involved many factors, but one disturbing possibility was that the agency simply couldn’t afford to, given its limited resources.

Robert Khuzami, the S.E.C.’s head of enforcement, told me his division was underfunded even before Dodd-Frank expanded its responsibilities and that the proposed appropriation would leave his division in dire straits. The S.E.C. oversees more than 35,000 publicly traded companies and regulated institutions, not counting the hedge fund advisers that would be added under the new legislation. While he wouldn’t comment on Tyson, he noted that with fixed costs like salaries accounting for nearly 70 percent of the agency’s budget, “you have to squeeze the savings out of what’s left, like travel, and especially foreign travel, at a time we see more globalization, more insider trading through offshore accounts. It’s highly cost-intensive.”

An S.E.C. memo on the committee’s proposed budget warns: “We may be forced to decline to prosecute certain persons who violate the law; settle cases on terms we might otherwise not prefer; name fewer defendants in a given action; restrict the types of investigative techniques employed; or conclude investigations earlier than we otherwise would.”

It’s not just that cases aren’t being adequately investigated and filed. Under Mr. Khuzami and the S.E.C.’s chairwoman, Mary L. Schapiro, the enforcement division has tried to be more proactive, detecting complex frauds before they cost investors billions. Mr. Khuzami stressed that analyzing trading patterns involves a staggering amount of data, especially the high-frequency trading that crippled markets during last year’s flash crash, and requires investment in state-of-the-art information technology the S.E.C. lacks. Sorting through the wreckage of the mortgage crisis, with its complex derivatives and millions of mortgages bundled into esoteric trading vehicles, is highly labor-intensive.

By way of comparison, in 2009 Citigroup and JPMorgan Chase, two institutions the S.E.C. regulates, spent $4.6 billion each — four times the S.E.C.’s entire annual budget — on information technology alone. Under the House’s proposed budget, the S.E.C.’s resources for technology would be cut by $10 million and a $50 million reserve fund earmarked for technology would be eliminated.

If anything, the agency’s failure to detect the Madoff scheme despite four ineffectual investigations would argue in favor of more, not less, enforcement spending. One investigation foundered when the Madoff team was abruptly shifted to mutual fund market timing, since the S.E.C. lacked the manpower to do both. An important tip got lost in the system because of inadequate tracking mechanisms. Another Madoff investigation didn’t get logged into the computer system, so one office didn’t know what the other was doing. And the most glaring problem identified by the S.E.C.’s inspector general was that investigators lacked the expertise to ask the right questions.

Mr. Khuzami said the agency had addressed all the Madoff issues that didn’t involve additional funding. But “at some point you have to develop the expertise. We’ve done some hiring, but that is threatened now.” One consequence of the proposed appropriation is “to essentially freeze hiring for 2012,” according to the S.E.C. memo.

It’s hard to believe that enforcing the securities laws — most of which long predate the recent Dodd-Frank reforms — would be a partisan issue. Yet it has sparked a fierce ideological clash, with Republicans lining up to criticize the agency and withhold funds. “Republicans are falsely invoking the deficit to effectively repeal Dodd-Frank,” Representative Barney Frank, Democrat of Massachusetts, said. “These people are ideologues.” My requests for comment to two vocal critics of the S.E.C. in Congress —Representatives Spencer Bachus, the appropriations committee chairman from Alabama, and Scott Garrett of New Jersey, both Republicans — went unanswered.

Given the magnitude of the S.E.C.’s task, Congress could make Wall Street firms pay more and not less to police the mess they helped create. A government that wants to hold wrongdoers’ feet to the fire and prevent future abuses could finance an S.E.C. enforcement surge analogous to the military’s strategy in Iraq and Afghanistan. Congress could fully finance the S.E.C.’s requested $1.4 billion — and add another $100 million for technology spending. The $1.5 billion would be paid entirely through fees. Financing the S.E.C. adds nothing to the federal deficit and, on the contrary, will help reduce it. It is an investment that would most likely generate increased fines and penalties that could be returned to defrauded investors and taxpayers.

“People say we aren’t charging enough individuals,” Mr. Khuzami said. “But we have a strong enforcement record. We aren’t acting recklessly, or operating in the gray areas, but rather bringing cases involving real frauds and misconduct and returning funds to victims. We need funding to continue those efforts, efforts that even Milton Friedman” — the noted free market economist — “conceded were an appropriate role for government.”

E-mail: jim.stewart@nytimes.com

From the Sideshow:

I haven't said anything about Strauss-Kahn because it just looked like another one of those things where an open secret suddenly became important to "expose" when he was in the way. of important people. That's the funny thing about sex scandals - they are so handy for going after someone, but they aren't even acknowledged, no matter how blatant or egregious, unless you get on the wrong side of the right people. Back in the days when we were still friends with Saddam, people were screaming about the rape rooms and everyone knew about them, but the wrong people were doing the screaming while Saddam was doing what he was told, so they were of no consequence. Then he became the designated enemy, and suddenly we were hearing about rape rooms all the time. The Right People couldn't wait to destroy Anthony Weiner's career, and for some reason he didn't realize he was in the line of fire and did something stupid. Just like Tim Russert's obsession with Clinton's appendage. Why do these things matter? Because they are convenient. (I sometimes wonder if Clinton wasn't the choice for president because they always knew they could get him on his bimbo habit if he misbehaved.) Assange is probably an inconsiderate lover (or maybe not - he could just be a slut and they knew they could find a way to make him behave more irresponsibly than usual with a bit of persuasion), but the intensity with which they went after him is just not usual for even the most brutal rape, let alone what he is accused of. I'm betting a lot of the people who called for Strauss-Kahn's head after his exposure knew all along he was a creep toward women but they just saw that as convenient leverage.

And how about all that rock-solid evidence that has now been acquired about all those isolated incidents on 9/11 regarding the Moving Vans and the celebrating Israelis? It almost blows my mind that we now know so much about it. (And, yes, I saw the segments on the TV news about them that were never followed up with investigations and/or reporting. And I have been waiting for this.)

Osama bin Laden was immediately blamed for the 9/11 attacks even though he had no previous record of doing anything on this scale. Immediately after the Flight 11 hit World Trade Center 1, CIA Director George Tenet said "You know, this has bin Laden's fingerprints all over it." (27) The compliant mainstream media completely ignored the Israeli connection. Immediately following the 9-11 attacks the media was filled with stories linking the attacks to bin Laden. TV talking-heads, "experts", and scribblers of every stripe spoon-fed a gullible American public a steady diet of the most outrageous propaganda imaginable.

We were told that the reason bin Laden attacked the USA was because he hates our "freedom" and "democracy". The Muslims were "medieval" and they wanted to destroy us because they envied our wealth, were still bitter about the Crusades, and were offended by Britney Spears shaking her tits and ass all over the place!

But bin Laden strongly denied any role in the attacks and suggested that Zionists orchestrated the 9-11 attacks. The BBC published bin Laden's statement of denial in which he said: "I was not involved in the September 11 attacks in the United States nor did I have knowledge of the attacks. There exists a government within a government within the United States. The United States should try to trace the perpetrators of these attacks within itself; to the people who want to make the present century a century of conflict between Islam and Christianity. That secret government must be asked as to who carried out the attacks. ... The American system is totally in control of the Jews, whose first priority is Israel, not the United States." (28)

You never heard that quote on your nightly newscast, did you? ______________________