The SEC Fiddles While the Market Burns

Look carefully and you can see Chris Cox with a fiddle

The Dow Jones Industrial Average is down nearly 300 points -- 2.6% -- and the Standard & Poor's 500 is down over 3%. Lehman is bankrupt, AIG is bailed out, Merrill Lynch is acquired, because of a mortgage crisis about which the SEC, under its do-nothing chairman Christopher Cox, has done absolutely zippo.

So what does the aforementioned regulatory agency do while Wall Street burns like Warsaw in 1945? It issues a press release heralding regulations, effective tomorrow, targeting that great menace -- "abusive naked short sellers."

"These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short selling," said SEC Chairman Christopher Cox. "The Enforcement Division, the Office of Compliance Inspections and Examinations, and the Division of Trading and Markets will now have these weapons in their arsenal in their continuing battle to stop unlawful manipulation."

OK, but what has "abusive naked short sellers" got to do with the aforementioned Burning of Warsaw? Absolutely nothing, and the SEC does not even attempt to claim that it has, or even cite one company that has been victim of this Great Scourge.

To make this "action" even more laughable, Cox didn't take a step that actually might have had some logical basis, and reinstated the "uptick rule." But that would have upset Wall Street, and perhaps done some good, by preventing actual manipulative short selling, so Cox wasn't going to do that.

You have to admit that Cox is working hard, not to do his job of protecting the markets, but at outdoing Harvey Pitt for the distinction of being the worst SEC chairman in recent history. Pitt, a former lawyer for white collar crooks, now is a paid lobbyist for anti-shorting crowd -- mainly CEOs of small companies who want to divert blame from their incompetence.

Cox is far more competent than Pitt was at pretending to actually do stuff while actually serving corporate interests. So he issues press releases claiming to help investors, while actually carrying water for Corporate America. In this instance, the anti-shorting jihad has the full support of such champions of investor rights as the U.S. Chamber of Commerce and Washington Legal Foundation.

© 2008 Gary Weiss. All rights reserved.