The Securities and Exchange Commission under William Donaldson (appointed after the Enron mess) had tried to regulate hedge funds. But Christopher Cox, current SEC chairman and no friend of regulation, said he would consult other members of the administration about whether to appeal the ruling, which "came on the same day as disclosures," reports The Washington Post, that the feds "are investigating Pequot Capital Management, Inc., a $7 billion hedge fund, for possible insider trading." Nice timing, judges.
This is the third time in less than a year the appeals court has blocked the SEC from acting beyond its authority. According to The Washington Post, "Former SEC member Harvey J. Goldschmid, who voted to approve the plan, yesterday urged regulators to appeal to the U.S. Supreme Court, members of Congress or both. In the Pequot case, a former SEC lawyer who worked on the Pequot investigation before being fired by the agency has written a letter to key members of the Senate banking and finance committees alleging that the SEC dropped the probe because of political pressure." The lawyer said he was prevented by political pressure from interviewing a top Wall Street executive: Sources said the executive was John J. Mack, once chairman of Pequot and now chief executive of Morgan Stanley -- and a major fundraiser for President Bush's campaigns. I'd say the guy's wired.
So what we have here is yet another case of ideological decision-making ("all government regulation is bad") being applied despite the most obvious promptings of common sense. Come to think of it, that's exactly the same pattern this administration has followed with war in the Middle East, nuclear showdowns, global warming and Apocalypse Now.
Well, if the administration won't do something, how about Congress? Reps. Barney Frank, Michael Capuano and Paul Kanjorski are co-sponsoring a bill to reverse the court decision -- and to gather more information about how hedge funds affect the economy. This would seem a peppy response, except Congress seems quite determined to do nothing at all these days, having already beaten the record of the "do-nothing Congress" of the Truman era. As near as can be figured out, the Republican "game plan" is to do absolutely nothing between now and November. This doesn't improve anyone's opinion of the Republican Congress, but has the happy effect of dragging the Democrats down with them.
© Creators Syndicate
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July 18, 2006 (http://www.albionmonitor.com)
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