So reports the New York Times:

Having passed the Dodd-Frank Act earlier this summer, the bill that aspires to reorder our financial universe in the wake of the most serious economic crisis in generations, Congress has moved on to other matters. Regulators are left to write the rules that will make financial reform a reality — or not — and are beginning that laborious process. ..

The question is this: Will regulators give Wall Street’s big dealers what they want in a second bite of the apple?

There is no doubt that regulating the freewheeling derivatives market is important work. If done right, heightened scrutiny could well eliminate the potential for another disastrous bank run like the one that threatened world markets in September 2008 when the American International Group imploded. The insurer had written insurance on mortgage securities— a derivative known as a credit default swap — and almost collapsed after, among other things, onerous collateral calls from its trading partners drained its cash...

“It is again going back to the battlefield, and this is a much more complicated battlefield...”

“There is going to be so much pressure from the biggest financial institutions not to have limits,” said Heather Slavkin, senior policy adviser of the A.F.L.-C.I.O.’s Office of Investment and a participant in the Aug. 20 meeting. “Regulators are going to be very much focused on what types of swaps get cleared, so the governance and ownership aspects that are just as important may not get the attention they deserve.”

It's not over yet. We must continue to hold the regulators accountable and ensure that they follow both the letter and the spirit of the Wall Street Reform law.

The Republicans:

Behind closed doors, the two Republican members of the Securities and Exchange Commission sharply questioned senior investigators last week about whether the evidence they had assembled was strong enough to file a fraud case against Goldman Sachs, according to current and former SEC officials familiar with the matter.

The two commissioners... voted against approving it.

Courts should decide whether or not Goldman should pay damages - not Republicans. First it's Mitch McConnell meeting with Wall Street executives behind closed doors and, hours after the meeting, taking action to stymie real reform. Now, it's Republicans on the SEC saying no to letting the courts decide Goldman's fate. More and more, it seems that the Republicans who would rather do Wall Street's bidding than hold them accountable.

Unbelievable:

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.

This occurred under Christopher Cox's watch. Christopher Cox, George W. Bush's SEC Chairman, was asleep at the switch during the run up to the global financial crisis and he needs to be held accountable for failures like this. This failure to crack down on employees' porn habit is a sign of of the kind of inefficient and incapable office he ran. He needs to answer questions about his incompetence and failures. The Financial Crisis Inquiry Commission should subpoena Cox and hear his testimony.

A $7 BILLION ponzi scheme. The SEC knew about it in 1997. But, no action was taken against the scheme until 2009. TPM Muckracker has the story:

In news buried by the Goldman fraud charges, the Inspector General for the SEC issued a blistering 159-page report Friday concluding that the agency's Fort Worth office knew that Texas businessman Allen Stanford was operating a Ponzi scheme in 1997 -- but didn't make a serious effort to pursue the matter for eight years, until 2005.

Stanford, a flamboyant Texas billionaire, is currently in jail facing charges of operating a $7 billion Ponzi scheme.

The inspector general's report paints the enforcement section of the Fort Worth office as the main culprit. The IG concludes:

"[T]he SEC's Fort Worth office was aware since 1997 that Robert Allen Stanford was likely operating a Ponzi scheme, having come to that conclusion a mere two years after Stanford Group Company ('SGC'), Stanford's investment adviser, registered with the SEC in 1995. We found that over the next 8 years, the SEC's Fort Worth Examination group conducted four examinations of Stanford's operations, finding in each examination that the CDs could not have been 'legitimate,' and that it was 'highly unlikely' that the returns Stanford claimed to generate could have been achieved with the purported conservative investment approach.

Fort Worth examiners dutifully conducted examinations of Stanford in 1997, 1998, 2002 and 2004, concluding in each case that Stanford's CDs were likely a Ponzi scheme or a similar fraudulent scheme. The only significant difference in the Examination group's findings over the years was that the potential fraud grew exponentially, from $250 million to $1.5 billion."

This is a massive failure on the part of the SEC. For too long, a revolving door between the SEC and Wall Street has created an agency that is incapable of enforcing the law. SEC leaders sat idly buy as more and more innocent people fell victim to Allen Stanford. That must not happen again. The SEC and our financial regulatory environment need reform.

This is encouraging. But, it's also a sign that George W. Bush's SEC chair Christopher Cox should've done more to bring these schemes to light before the global financial crisis. Accountable America's Tom Matzzie:

The SEC's action against Goldman Sachs is a good step in the right direction but more is needed urgently. More than any other Wall Street bank, Goldman Sachs gamed the system to the bank's benefit and to the detriment of the public, taxpayers, investors and the U.S. economy. What Goldman Sachs did was no different than a baseball player placing bets against his own team. In addition to civil action, there should be criminal investigations.

One thing that is also becoming clear is that the SEC under former Chairman Christopher Cox was asleep at the switch. This fraud happened 20 months before Cox left his post as SEC Chair. It is clear that Cox hobbled the SEC when it was most needed to protect the public. We need financial reform to setup structures and rules that make it impossible for a regulator to hobble investor protections. But we also need public accountability for Christopher Cox and other regulators who failed to do their job. The Financial Crisis Inquiry Commission should immediately subpoena Cox to appear at their next hearing. Cox should answer as to why he didn't stop these frauds before they spun out of control and wrecked the U.S. economy. If there was any impropriety by Cox that should not be swept under the rug--it must be exposed.

While this action by the SEC is encouraging, the pace and volume of civil and criminal actions related to the financial crisis is woefully inadequate. During the S&L crisis, a series of strike forces based in 27 cities were staffed with 1,000 FBI agents, analysts and dozens of federal prosecutors. The result was no less than 1,852 S&L officials were prosecuted and 1,072 were jailed. More than 500 of these were top officers. Where are those task forces today? Where are those prosecutors? Where are those investigations? The SEC, the Department of Justice and other agencies need to do more and do it now.

The Financial Crisis Inquiry Commission (FCIC) can hold Christopher Cox accountable. They can seek subpoena powers and make him testify before the committee. It's time for the FCIC to act.