The SEC leakers and the NYT reporters almost have to be admired for their audacity. Admittedly, the SEC enforcement staff, as my first column explained in detail, has nothing to be brag about in their entire response to the fraud epidemics that drove the crisis and caused the worst epidemic of securities fraud in history. Not a single elite banker who led a control fraud has had his fraud proceeds removed by the SEC. Not a single elite banker who became immensely wealthy by leading a control fraud has even had to personally pay a non-trivial portion of his fraud proceeds to the SEC. In this long list of failures Lehman stands out as a glaring failure. Lehman was destroyed by widespread looting that made it senior officers exceptionally wealthy. Lehman’s failure triggered the global financial crisis. The SEC allowed Lehman’s securities frauds to continue for many years when it was not only reviewing Lehman’s securities filings but also serving as Lehman’s “consolidated supervision” authority. The SEC compounded its total failure as Lehman’s supervisor through a total failure as an enforcer of the securities laws and its supervisory rules even after Lehman’s control fraud caused its failure. The mortgage fraud crisis represents the worst enforcement failure by the SEC in its history. Cannelos and the SEC flacks now have the chutzpah to try to spin one of the SEC’s worst enforcement failures into a morality play in which Cannelos is the hero precisely because he refused to hold Lehman’s looters accountable for their violations and allowed them to walk away wealthy with the proceeds of numerous insider fraud schemes. The villain becomes Ms. Schapiro who is reimagined as a would-be unethical official who tried to sue the poor, innocent Lehman officers for “political” reasons but was blocked from doing so by Cannelos’ selfless valor and dedication to “justice.” It is an odd form of “justice” in which the most elite frauds became wealthy by scams that caused a $11 trillion loss to American households and cost over 10 million Americans their jobs and avoid all accountability for their frauds. But that is Cannelos’ definition of “justice” and the NYT reporters are so credulous that they have become the propagandists for Cannelos and Lehman’s looters.
Posted on: Sun, 15 Sep 2013 07:39:42 +0000
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