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Is the SEC Porn Story a New Problem, or Political Ploy?

 First thing this morning, I read some startling headlines about rampant porn surfing at the Securities and Exchange Commission. Big story, right? Especially relevant right now, too, as Congress prepares for a showdown over financial reform. If it were the first time this news had ever been reported, I'd say the timing had probably been a matter of coincidence.

Today's reports follow a streak of scathing criticism of the regulator, despite its high-profile lawsuit against Goldman Sachs. Earlier this week, the agency was slammed in a Congressional hearing for failing to rein in Lehman Brothers. Last week, it was criticized in another Inspector General report for making "no meaningful effort" (PDF) to investigative a massive Ponzi scheme.

Now, this porn thing.

Oddly enough, news of the SEC's porn problem is not a new revelation. In 2008, we reported 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 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.

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

But this time, Republican lawmakers have taken the porn issue as an opportunity to further criticize the regulator. 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 -- 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.)

On an interview on Fox News with Greta Van Susteren on Wednesday, Issa stopped short of declaring that the timing of the Goldman lawsuit was politically motivated, but he sure dropped a lot of hints about the coincidence in timing. From the Fox transcript:

ISSA: You know, there's this long list of coincidences, yes, of course ...

VAN SUSTEREN: But you think the effort was -- you think that they used the civil charges in order to get the American people all upset about Goldman Sachs so that they would put pressure on Republicans in the Senate to really move forward with this. ....

ISSA: That's certainly a question we have. And Greta, I don't have answers to these questions. What I see is a very unusual event. They could have done this partisan, party-line 3-to-2 vote in the SEC and released it six months ago, six months from now. And they -- for that matter, they could have at least released it after the trading day, as is their tradition.

Is it a coincidence, then, that Rep. Issa suddenly had a great deal to say about how troubling the porn problem at the SEC is, when this news has been around for years? Is it a coincidence, then, that the SEC's porn problem has resurfaced in the headlines after Sen. Chuck Grassley, a Republican from Iowa, specifically requested a report from the inspector general?

As Rep. Issa might say, I don't have answers to these questions. But I must say, it is a very unusual event.

Didn’t Bush appoint the head of SEC & then progressively cut the budget for enforcement? Didn’t he also make sure there were people vetted deeply in just about every Federal Department that were Bush believers, I believe are called moles? The Dept. of Justice? A very many who were not qualified to hold the positions that they hold? In other words, isn’t the Federal Government riddled through out with these same moles, used to impede any investigation or throw off to a false direction. Who were the people cited for porn? Some people, out of boredom, will gravitate in that direction.

Instead of the “I gotcha moments”, the stalling tactics that is the hallmark of the present Republican Party of No fame, one would think that these grown adult members would act in a mature manner in solving the woes of the Nation, that they clearly have had a hand in creating. It’s a shame that this countries political parties have sunk to the level of destroying the U.S.A. because of ego driven beliefs.

J. A. Schlereth Jr.

April 24, 2010, 6:23 a.m.

Is it a coincidence?

No way.  It’s opportunism.  Issa saw a chance to use the porn thing against banking reform so he is.  Republicans have become very good at obstructing the process.  There are no coincidences.

Nothing surprises me. Porn, lies, cheating, greed, it’s has become so American.
Everything about Wall Street stinks. too bad it’s the only way the little guy, the real sucker can build on his.her hard earned money…and they are being used and chested by the Big Daddy of Wall Street that is screwing them. and the banks….too.
there can’t be enough “TEA” to dump change anything.

The SEC porn fiasco is relevant to the argument over re-regulation. It highlights the major problem which is that for well over a generation Americans have been schooled in an ideology which holds that government is the problem and not the solution.  When people indoctrinated in that anti-government education enter public service they inevitably with either neglect or sabotage the public good.  Americans again must be educated, both in and out of school, in democratic virtues that emphasize public service rather than personal greed.  This used to be the case in America and can again be a part of our education.

I don’t see this as a coincidence at all, its strategic planning.

Somewhere someone within Obama’s campaign is playing puppet master with the news cycle. Obama and Dems take major league hits from healthcare? Okay, well lets time things just right to make sure we have 2 or 3 things pop off at the same time to help us advance our agenda of regulating wall street.

1. Goldman Sachs ‘scandal,’ breaks, public anger rises

2. SEC porn usage outrage

Now, the masses have been worked up in a tizzy and anyone who opposes reform is obviously pro goldman sachs and pro porn on the job. Could there be two more toxic things for a public official to be tied to going into this decisive mid term election?

Why is anyone surprised? This is just par for the course for the SEC. - Arunabh Das

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