Madoff

The Washington Post editorial board gives its take on the Madoff scandal:

"Deeply troubling" is SEC Chairman Christopher Cox's appropriate assessment of his agency's failure to catch the Madoff fraud, which seems to have occurred not only on his watch, but also on that of two predecessors. Hindsight is 20-20, and even when someone blows the whistle, it can be devilishly hard to unmask a skilled con man, especially one like Mr. Madoff, who was a former chairman of the board of Nasdaq and enjoyed relationships with financiers, philanthropists and politicians the world over. Nevertheless, if this scandal demonstrates anything, it is how easily even the most sophisticated investors can be gulled -- and that the general public needs alert and aggressive government regulation. Regulators let the people down in this case, big-time. That must be investigated as urgently as Mr. Madoff's alleged crimes.

So let's get this straight: The Washington Post believes that "the general public needs alert and aggressive government regulation" even though it notes that such crimes are "devilishly hard to unmask" and that the Madoff scandal occurred under three diffeent SEC chairmen. To me that would suggest that the concept of using regulation is perhaps flawed given that this was able to occur regardless of who was captaining the ship. It seems that the editorialists are so married to the idea of regulation being the necessary tonic that even when it fails that it gives them no pause.

And for those that think the Bush Administration has kicked regulation to the curb these past 8 years -- you know, the same administration that signed Sarbanes-Oxley into law -- consider this graph:

Here's the Wall Street Journal's accompanying editorial.