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Obama Doesn’t Understand SEC

Obama mocked McCain with this little missive.

Obama heaped criticism and sarcasm on John McCain, his Republican rival, and mocked his call to fire the head of the Securities and Exchange Commission.

“I think that’s all fine and good but here’s what I think,” Obama said. “In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other way crowd in Washington who has led us down this disastrous path. Don’t just get rid of one guy. Get rid of this administration. Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who’s going to fight for you.”

There’s a few little problems with Obama’s rant.  First of all, Obama is part of that Washington crowd.  And when McCain was calling for reform in 2005 and correctly predicting the financial crisis in which we find ourselves, Obama remained silent. 

Second, Obama can’t gut the SEC.  Here’s why:

The Securities and Exchange Commission has five Commissioners who are appointed by the President of the United States with the advice and consent of the Senate. Their terms last five years and are staggered so that one Commissioner’s term ends on June 5 of each year. To ensure that the Commission remains non-partisan, no more than three Commissioners may belong to the same political party. The President also designates one of the Commissioners as Chairman, the SEC’s top executive.

In other words, McCain is correct in that the President can sack the Chairman and appoint a new one.  But the President does not have any power to fire anyone off of the Commission.  In fact, the only body that could remove a Commissioner is… the Congress.  Also, look at the dates of appointment:

2005
2006
2008
2008
2008

The President can’t replace anyone on the Commission until 2010.  As far as the SEC is concerned, Obama’s notion that electing him would result in a brand new administration and bureaucracy, is completely wrong.

Posted by Owen at 1806 hrs
Economy + Politics + Politics - General

1. Actually, the president can’t fire the head of the SEC. And how did Democrats stop the McCain bill (it wasn’t actually his bill - other Republicans crafted it and he cosponsored it) when they were in the minority in 2005?

   Finally, that bill would have probably made things worse, not better.

   Next, please.

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 1958 hrs
   
   
   

2. Barack’s broader point stands. If you want to get rid of rightwing deregulators, get rid of the Republican administration that staffs the agencies.

   He also got in this nice zinger: “John McCain can’t decide whether he’s Barry Goldwater or Dennis Kucinich. He is not clear about what he thinks or what he believes.”

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2006 hrs
   
   
   

3. Yeah, nice zinger.  He was really in the zone when he was reading that teleprompter, wasn’t he?

   Rest easy, America.  Obama and his Fannie Mae cronies are just who we need now as reformers.

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2029 hrs
   
   
   

4. I tend to agree with Steve-O here.  Not on McCain being responsible for this in any way, but the fact this is the Bush administration that didn’t stop this stuff. Christopher Cox has been a weak, incompetent idiot. Enough said.

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2030 hrs
   
   
   

5. In all of this turmoil, I have yet to see any accusations of illegal behavior; the SEC cannot - regardless of who’s president - move as a regulator as fast as the market employs creative destruction and seeks to maximize returns.

   Think of steroids and testing - the former is always ahead of the latter.

   That’s what is happening - a market correction of irresponsible risk.  Those who took those risks, unfortunatley, are being bailed out by Uncle Sam.

   In the case of AIG, it is now nationalized; isn’t that what Democrats like Obama want?  Lest we forgot Democrats’ proposals earlier this summer to nationalize the oil industry.

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2044 hrs
   
   
   

6. great article and site! my good friend just did a compare contrast piece on the two candidates.  pretty intriguing.
   http://womenartmoney.blogspot.com/2008/09/compare-and-contrast.html

   Posted by cody on September 18, 2008 at 2136 hrs
   
   
   

7. #

   I tend to agree with Steve-O here.  Not on McCain being responsible for this in any way, but the fact this is the Bush administration that didn’t stop this stuff. Christopher Cox has been a weak, incompetent idiot. Enough said.
   Posted by Steve Austin on September 18, 2008 at 2030 hrs

   The SEC only reviews financial institutions and enforces the regulations they are given.
   The congress and it’s committees were the ones who could have done something about this with intelligent regulations. For the last two years the democratically controlled congress has done nothing!

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2153 hrs
   
   
   

8. Actually, the president can’t fire the head of the SEC.

   Yes, Steve-O, he can.

   Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2157 hrs
   
   
   

9. The problem with Bear, Lehman, and Merrill was precisely the SEC, which authorized them to go from 12x to 30x (or 40x) leverage.

   But NONE of the current SEC members were empaneled at the time (2004.)

   Even Ben Stein, no LeftyWonzo, knows this, and has written about it just after Bear collapsed.

   As to “naked shorts;” it’s not really a legitimate issue—except to the shareholders of Bear, Lehman, (etc.) who are getting precisely what they deserve—a big, nasty, haircut.

   Posted by dad29 on September 18, 2008 at 2228 hrs
   
   
   

10. The SEC made a rule change in 2004 that allowed broker-dealers like our now extinct Wall Street Houses to go above 12 to 1 leverage. 

    Essentially we gave these guys a license to drive their businesses and the markets off the cliff.  Cox was not yet chairman of the SEC when this took place, but it still on the watch of the Bush administration.  I’m conservative, but I’ll call em as I see em. 

    This is a good article explaining it:
    http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/

    By the way, Charlie Sykes can cover this story and not claim it’s all anti-Bush propaganda since even Larry Kudlow was outraged talking about how this ever occurred on his show tonight.

    Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2235 hrs
    
    
    

11. Dad29 beat me to the punch.

    By the way, I know that Jim Cramer of CNBC is nuts, but he’s also damn smart. He at least tossed out an idea that the short selling is financial terrorism….see link below.  I doubt this is the case, but you never know. 

    http://www.cnbc.com/id/26778065

    Posted by .(JavaScript must be enabled to view this email address) on September 18, 2008 at 2238 hrs
    
    
    

12. Very interesting stuff.  I agree that businesses that take big risks should be allowed to fail.  That’s precisely how we can assure it won’t happen again.  If Uncle Sam - we - bail ‘em out everytime the house of cards collapses, we guarantee it’ll be bigger and worse the next time.

    I honestly believe this is a big problem for McCain.  Regardless of whether or not he has any culpability (I think he and Obama bear at least some responsibility), the “R” after his name means he’ll be tagged with the problem, and it’ll hurt him come election time.  Remember - “it’s the economy, stupid”.

    Posted by .(JavaScript must be enabled to view this email address) on September 19, 2008 at 0924 hrs
    
    
    

13. I honestly believe this is a big problem for McCain.

    This is a big problem period.

    At least it will give both candidates an opportunity to give us a concrete idea as to what their approach will be to this if they get elected.

    Declaring Cox responsible for this is as laughable as restricting short selling.

    You want to find someone responsible for this, look in the mirror.

    Posted by .(JavaScript must be enabled to view this email address) on September 19, 2008 at 1038 hrs
    
    
    

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