So, I was on the Yahoo! Finance page today to see if my bank, WAMU, is still around (I know, that is a scary way to look at life, but heck, that is the Bush economy nowadays), and before I got to the point of looking at WAMU's stock price to see if it was still listed, I noticed a video that read: "Sen. Bunning on McCain, Cox, and Bailouts" so I was intrigued and watched the 7:30 minute video at http://cosmos.bcst.yahoo.com/....
I am not sure how to add a video so I apologize for sending you to Fox's site to watch it...but it is interesting because in the beginning of the video is where Bunning slams McCain as follows:
Commentator:
First of all, what do you make of John McCain's call for the firing of [SEC Chairman] Mr. Cox?
Bunning, a Republican from Kentucky responds with:
Well, I am a little shocked because Chris Cox's responsibilities is not watching the mortgage markets, that is the Federal Reserve's job and since 1994, Alan Greenspan and presently Ben Bernanke have vacated that job and not done it.
The rest of this interview makes it clear that Bunning would fire (or do whatever he could to initiate the resignation of) the Chairman of the Federal Reserve and the Secretary of the Treasury, but NOT the head of the SEC who was not responsible for this. As a financial person, this makes sense to me since the SEC was created in order to ensure that outside investors and 3rd parties have access to information pertinent to making sound financial investments (that is, that there is no information asymmetry in the market). In particular, the SEC is in charge of ensuring that filings by public companies (like 10Ks, 8Ks, and 10Qs) are adequate and not misleading.
From the SEC website at http://www.sec.gov/...
The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.
The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.
The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation's economy. To insure that this objective is always being met, the SEC continually works with all major market participants, including especially the investors in our securities markets, to listen to their concerns and to learn from their experience.
The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.
Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.
So, because there is no social safety net like there is with banks (e.g. FDIC insurance), the SEC is responsible for ensuring that there is not information asymmetry in the stock market. That is, the SEC is supposed to make sure that you know as much information as you need to in order to make an informed decision on investing in a stock as a person that works at that company in a non-fiduciary duty type of position.
There have been times when the SEC dropped the ball (e.g. the antiquated SEC regulations in my mind were partially at fault for the fraud involved at Enron, WorldCom, and Global Crossing). But this is NOT one of those times.
So, let me be clear, I agree 100% with Bunning that this is not an SEC issue but rather a capital markets issue (and in particular, a failure to adequately regulate complex financial instruments like derivatives, swaps, and mortgage-backed securities). By McCain calling for the dismissal of Cox at the SEC (which regulates public companies) rather than the people in charge of the financial system itself, McCain is further demonstrating his lack of knowledge about the economy.
So, today both Hagel (see http://news.bbc.co.uk/...) and Bunning have slammed McCain and Palin.
Just another bad day for McCain on the campaign trail...
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