A New Big, Bad SEC Sheriff In Town

Today, Zachary Goldfarb in the Washington Post profiled the new Securities and Exchange Commission (SEC) enforcement director, Robert S. Khuzami. Completely unsurprisingly, the pro-establishment slant could have been submitted directly by the SEC's press office, an annoying a teeth-gritting pattern I have discussed before.

In addition to the Washington Post siphoning work from John Nester, Khuzami's comments are troubling for anyone who values liberty and a fair, nonintrusive government. Let's deconstruct the fawning bio article.

Khuzami discusses how the SEC has been tarnished by the Bernard L. Madoff fraud, leading to plans to "shake up" his team of 700 lawyers and -- you can see this coming a mile away -- "put more arrows in the SEC quiver." (Has any government bureaucrat ever expressly stated a need to tone down its authority?)

As if having whistleblower Harry Markopolos tell the SEC for NINE YEARS about Madoff's alleged fraud wasn't sufficient "firepower"? Markopolos did all the work for the SEC -- the agency merely had to open its mail. But, of course, the oldest admonition in the book -- more authority is not needed; simply enforcing existing rules would suffice -- would fall on deaf ears.

So, to be clear, the governmental agency falls on its face humiliatingly, and yet it will be rewarded with increased power. This is the same bureaucracy to whom people are willing to hand over their healthcare.

...Khuzami continues: "We'll distinguish ourselves in the future by being fast and furious."

Wonderful. Given that white-collar financial crimes are incredibly complex and arcane, what is not needed is painstaking, analytical investigation. Not sexy enough. What IS needed, instead, is the Wall Street equivalent of jackbooted clowns SWAT teams launching illegal no-knock raids. Yup, "fast and furious" lawyers will certainly (not) dot i's and cross t's to ensure effective prosecutions. Perhaps Khuzami is using that language to appeal to the anti-finance sentiment in the country.

In case the reader is not concerned about this soon-to-occur grab for power, consider the words of Alfred Jay Nock in Our Enemy, The State:

"[E]very assumption of State power, whether by gift or seizure, leaves society with so much less power; there is never, nor can be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power."

One can already sense that Khuzami is yearning to hear the strains of Il Buono, il Brutto, il Cattivo play as he swaggers through the doors of the NYSE's trading floor.