Wow. It’s going to be hard to pull out of the mudpit left by the artillery barrage Markopolos just adjusted onto their heads, but the SEC is going to try, damnit.
Written statements (which are almost universally useless) are read into the record.
These consist of:
Four descriptions of what the SEC does. (None compelling)
- One description of the location of the SEC offices in Washington.
- One hint that the SEC party line is going to be that the “Investment Adviser” part of the
- Madoff organization was regulated separately and therefore any regular oversight was bound to miss the massive Ponzi scheme.
It seems to us like this organization is toast.
- Recess Ends -
Chairman: Ok, the SEC better not be laying down any limitations on what we can hear from SEC employees. There seems to be a misunderstand as to who created whom and who is responsible to whom under the Constitution.
Wow. Apparently of one of the SEC witnesses tried to claim he was exempt and the Chairman of the Committee is NOT amused. A call was placed to the grand poobah at the SEC and the witness was delivered, threatened subpoenas not issued. Just… wow.
They aren’t just incompetent with respect to investigating fraud, they are optics challenged.
What a fiasco.
Chairman: Apparently, if there is a snowstorm in Washington, the SEC cannot help. When are you going to be able to testify about this issue?
Witness: I don’t know.
EP here: I find when trying to liveblog the SEC testimony, I have two choices-
1. Quote verbatim.
2. Sit with a puzzled look on my face, and a squint trying to read the lips of the witness in addition to listening desperately trying to understand what language she is talking in and why I am having a hard time finding any meaningful signal in the midst of the sea of financial enforcement white-noise.
If we wanted any answer at all as to why Madoff skated past these people, that is it. It’s not that they are incompetent, it is that they exude a deadly cloud of negative competence that sucks any progress, organization, or intelligence right out from everything it touches- and it is apparently pressurized so when issued it expands to engulf the entire room.
Prediction #1: There are 4 more Madoffs out there, of lesser but still staggering size.
Prediction #2: The showing of the SEC is so poor here that the successor organization will be so doggedly aggressive that in ten years time we will be having a replay of the IRS abuse investigations that were all the rage in the ’80s.
Fireworks from the Committee: You just took the preamble of your mission statement and broke it up into five segments. With all your agents and resources, one guy with a few friends and some helpers. You couldn’t find your backside with two hands with the lights off. You have totally, totally failed in your mission. Don’t you get it? You forfeited your right to investigate by not doing it, and now you are trying to tell us that because other people are looking into it you can’t talk about it? Like hell you won’t. So what the hell went on? That’s a question.
Witness: Let me start with enforcement….
Committee: You keep say alleged, alleged, this guy confessed on national television you might have noticed. If anyone made the case better than Mr, Markopolos that you people are totally inept, it is you. Now, Mr. Vollmer, you are the one who tried to avoid testifying, are you citing Executive Branch privilege?
Vollmer (Deputy General Counsel): I would like to answer your question
Chairman: It’s a yes or no question.
Vollmer: No it is not.
Committee: It’s a yes or no question. Are you asserting privilege or not?
Vollmer: Well, sort of. In part.
Committee: So is that the position of the executive?
Vollmer: Hum, haw, hum haw.