Porno For Regulators

Daniel Indiviglio at The Atlantic:

Senior staffers at the Securities and Exchange Commission were surfing Internet pornography when they should have been policing the financial system. A deeply disturbing SEC memo to Senator Chuck Grassley (R-IA) exposing this problem was reported Thursday night by ABC News. Here are some highlights via the Associated Press:

_A senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

_An accountant was blocked more than 16,000 times in a month from visiting websites classified as “Sex” or “Pornography.” Yet, he still managed to amass a collection of “very graphic” material on his hard drive by using Google images to bypass the SEC’s internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.

_Seventeen of the employees were “at a senior level,” earning salaries of up to $222,418.

_The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.

On one hand, two cases in 2007 means that either it wasn’t that widespread of a problem or it hadn’t yet been detected. On the other hand, the fact that this behavior seems to have been so prevalent among senior level employees is particularly troubling. They’re the ones who should have been closely watching the financial industry and leading the way to help prevent the system from collapsing.

A few things should be concluded from this revelation. First, government computers must need better firewalls to block out this content. Second, this is a pretty grim verdict on the effectiveness of regulators. When on the verge of the most major economic crisis in around 80 years, they were watching porn instead of the financial system.

Daniel Foster at The Corner:

It is a generality of American political discourse that, in the wake of crisis, liberals rush to creating new rules and regulations, and conservatives wonder why the current ones weren’t being enforced.

Well here’s a partial answer to the conservative question. While the financial world tumbled and the country fell into an economic abyss, Securities and Exchange Commission officials were surfing for porn.

Ann Althouse:

I wonder what people who read about this are thinking. I’ll bet a lot are outraged — and the GOP is banking on that outrage as it makes this an issue right now (because attacking the SEC is something they want to do for reasons utterly unrelated to porn). But I bet a lot of people — guys — feel really nervous about it because they are looking at porn at work too.

Marian Wang at ProPublica:

Oddly enough, news of the SEC’s porn problem is not a new revelation. In 2008, we reported [4] that the inspector general had discovered the agency’s pornography problem, and it wasn’t limited to just watching the stuff. One SEC employee went so far as to start his own private pornography business using SEC resources, “including Commission Internet access, e-mail, telephone and printer.”

So yes, it’s true that while the nation’s financial system teetered near collapse, senior staffers at a major financial regulatory agency spent hours surfing pornographic websites on the taxpayers’ dime. And it’s true that the agency’s watchdog found 31 serious offenders in the past two and a half years, 17 of whom were senior officials [5] whose salaries ranged from $100,000 to $222,000.

But the new memo also says that in the past five years, the SEC’s Inspector General conducted 33 investigations into SEC employees’ viewing porn at work. And the results of those investigations were routinely reported to Congress, and they’ve been publicly available all this time on the inspector general’s website [6].

We pointed out [4] the porn problem in a semiannual report from April 1, 2008, through Sept. 30, 2008 [7] (PDF). ABC News [8] pointed out similar findings in a report from Oct. 1, 2008, through March 31, 2009 [9] (PDF). Similar reports on porn surfing within the SEC were reported in February, first by The Washington Times [10] then blogged by The Wall Street Journal [11], The New York Daily News [12] and The Huffington Post [13], and later picked up by Gawker [14].

But this time, Republican lawmakers have taken the porn issue as an opportunity to further criticize the regulator [15]. The Associated Press quotes Rep. Darrell Issa:

California Rep. Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, said it was “disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse.” He said in a statement Thursday that SEC officials “were preoccupied with other distractions” when they should have been overseeing the growing problems in the financial system.

Of late, Republicans—and notably, Issa [16]—have criticized the SEC for being influenced by politics, after commissioners voted 3-2 to sue the investment bank Goldman Sachs for defrauding investors. (The two who voted against the civil charges were Republicans, with the two Democrats—and Chairman Mary Schapiro, an Independent—voting in favor.)

David Weigel:

This strikes me as politically wise and logically garbled — the SEC, in the period covered by this investigation, was a mess at many other levels (go read Andrew Ross Sorkin on then-Chairman Chris Cox’s fumbles during the 2008 meltdown), so why attack its old behavior instead of reforming it?

Jacob Sullum at Reason:

To Be Fair, I Bet Working at the SEC Is Pretty Boring

Wonkette:

The funniest scandal of the Great Depression 2008-201? was this SEC guy fapping furiously to a transvestite porn site at work while the Wall Street/America/Earth money scam was collapsing, in August 2008. In one three-week stretch, this unnamed Securities and Exchange Commission guy employed to police the nation’s financial system went to porno sites 1,880 times. Too much? Don’t judge! And now another 30 SEC employees — including senior officials earning up to $222,000 a year — have been investigated in this federal tranny-porn inquiry. How is this Chuck Grassley’s fault?The esteemed twitterer and senator requested the summary of the investigation last night, that’s how! Fap fap fap.

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Filed under Economics, Legislation Pending, The Crisis

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