Sunday, April 25, 2010

Finding a Context for the SEC Pornography Scandal

Now that the media has had its feeding frenzy over the revelation that SEC employees were using their computers to view pornography during work hours, it is time to pull back from the surface structure of this little bit of scandal-mongering and figure out whether or not there is any deep structure. This is one of those situations in which it may make sense to take stock of things through The Wall Street Journal. Kara Scannell filed a story yesterday that summarizes the basics nicely:

The Securities and Exchange Commission said it has already meted out punishment to a group of employees found to have viewed pornography during work hours.

Thirty-three people at the agency were found to have looked at porn over the past five years, according to a summary of internal probes conducted by the SEC's inspector general. All but two of the investigations were in the past three years.

The report said 17 senior SEC employees, earning between $99,000 and $222,000 a year, were among those who viewed porn on their office computers or on laptops while traveling.

None of the employees were named. The staffers' behavior violated government-wide ethics rules, the report said, and agency spokesman John Nester said each has been "disciplined or is in the process of being disciplined. Some have already been suspended or dismissed."

However, if we want to go looking for a deep structure, we need only skip over a one-sentence paragraph to land on the following observation in Scannell's account:

The disclosures come as the agency faces Republican scrutiny for filing a civil-fraud case against Goldman Sachs Group Inc. and one of its employees at a time when Congress is working to tighten oversight of the financial industry.

This paragraph had a profound trigger effect for the paranoid-conspiracy-theorist part of my character, if not for any of my more rational elements. I immediately thought of Eliot Spitzer and the undoing of his reform efforts by a sex scandal. I do not want to apologize for what Spitzer did away from his desk, but there were strong indications that he was moving in for a whopping kill against big-time abusers in the financial sector. This was one of those situations in which the guy had to be stopped "by any means necessary;" and that is exactly how he was stopped. This time around we have the SEC moving in for the kill, and guess what happened?

When the Spitzer scandal broke, Patricia Williams wrote a piece for The Nation entitled "Diary of a Mad Law Professor." She tried to clear away a lot of media-generated noise to get at what the signal really was. At the heart of that signal was the following sentence:

For it is not merely a failure to regulate Wall Street; it's a failure to govern at all.

Remember, all of this happened in October of 2008; so this was a major shot across the bow at the Bush Administration only a few weeks before Election Day. I, for one, took her analysis to be one of the best statements of the sort of needed change in which I wanted to believe.

So what is happening this time? We have the SEC working with all their might to ferret out abuses in the financial sector, and the strength of their efforts seems to be matched only by the vigor with which the Republican party is trying to ferret out abuses in the SEC. Thus comes the punch line: At the end of the day, that "failure to govern at all" seems to be in the best interests of the Republican Party, regardless of who is sitting in the Oval Office or which party holds how many seats in the two houses of the Congress. This is far more serious than accusing the Republicans of being "the party of 'no.'" This is accusing them of representing the interests of those who benefit the most when government fails, and it would appear that they are doing a very good job of representing those interests!

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