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Barney Frank: SEC Officials' Pornfest Exposes The Republican Lie Of Unregulated Markets

Let me tell you a story about a story that isn't a story but became a story because it was broadcast from major news sources with an air of breathle

Let me tell you a story about a story that isn't a story but became a story because it was broadcast from major news sources with an air of breathless indignation, laced with a tiny bit of naughtiness intended to disguise the true story because the Republicans aren't thrilled with the SEC right now.

Here's the juicy tidbit:

Senior staffers at the Securities and Exchange Commission spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system, an agency watchdog says.

Rep. Darrell Issa (R-CA) is shocked -- SHOCKED -- that such a thing would happen while the market is in meltdown mode.

Rep. Darrell Issa (R-Calif.), ranking Republican on the House Oversight and Government Reform Committee, said it was “nothing short of disturbing that high-ranking officials within the SEC were spending more time looking at pornography than taking action to help stave off the events that brought our nation's economy to the brink of collapse."

"This stunning report should make everyone question the wisdom of moving forward with plans to give regulators like the SEC even more widespread authority," Issa said in a subtle jab at ongoing financial reform efforts.

In the clip at the top of this post, Rep. Barney Frank patiently explains the "culture of the SEC" in response to Andrea Mitchell's question about whether the Madoff scandal might have been caught sooner if SEC officials weren't surfing porn instead of doing their jobs. He walks Mrs. Greenspan through the fallacies of her husband's philosophy of "let markets be king" and resulting underregulation that led to rampant fraud in the system.

Everything old is new again

The only problem with all this fuss? This story is all about a story already reported in November, 2008. ProPublica gave us the full scoop on it in November, 2008. November, 2008. That would be when the SEC was run by a Republican administration with George Dubya Bush as its leader, wouldn't it?

You can read the entire Inspector General's 94-page report for yourself, right here. The pornography allegations are only a very small part of a much more disturbing picture, actually. It's interesting to me to see the fuss around pornography when other, more serious and chilling allegations are contained within it. Here are a few of the interesting ones:

  • Investigation of Conflict of Interest, Improper Solicitation and

    Receipt of Gifts from a Prohibited Source, and Misuse of Official Position

  • Follow-up Investigation of Disruptive and Intimidating Behavior by a Senior Manager
  • Investigation of Failure to Maintain Active Bar Status

The report also has details about the investigation into reasons for Bear Stearns' collapse. The conclusions there are far more interesting than anything to do with SEC employees accessing pornography.

On a weekend where negotiations are moving ahead to get to a vote on financial regulation Monday, Issa's latest effort to manufacture scandal is just a cynical ploy to manipulate public opinion. It's a little like the "death panel" controversy, or the "Goldman Sachs gave more money to Obama than anyone else" controversy. The goal is to turn public opinion away from efforts to rein in what is completely out of control, water it down more than it is already, and pay off the Republican paymasters of Wall Street.

Nothing to see here, move along.

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