Another Scapegoat Bites the Dust

The fallout from our current economic malaise continues as Christopher Cox voluntarily steps down and out as Chairman of the Securities and Exchange Commission (SEC).  It had to be, of course, as he became one of the convenient snowflakes on which to blame the financial blizzard.  The opening salvo on Chairman Cox dates back to September 18, 2008, when then-presidential-nominee John McCain angrily announced: “If I were president today, I would fire him.” Actually, his scheduled term ends officially in June 2009, and the president possesses no authority to fire him—though such reality is usually ignored amidst campaign rhetoric.

It’s fair to assign some culpability to Mr. Cox, now completing a 3½-year tenure in the job.  The SEC is unquestionably a demoralized agency, having failed to foresee the collapse of Bear Stearns and Lehman Brothers or take action to prevent the Bernard Madoff fiasco.   However, might a more aggressive and diligent chairman have made a difference?  Consider for a moment the agency itself.  Established as part of President Franklin Roosevelt’s “New Deal” legislation of 1934 to administer the securities industry, it quickly became immersed in politics and favoritism under its first Chairman, Joseph P. Kennedy, father of President John Kennedy.  Today this ¾-century bureaucracy consists of 4 divisions, 18 offices and a staff of 3,800, scattered through 11 regional offices across the nation.  Its chairman is one of five commissioners who serve 5-year terms, with one commissioner’s term ending June 5 of each year.  

I recognize what Chairman Cox faced during his tenure at the helm.  I found myself in a similar position when, as a 29-year-old Navy Civil Engineer Corps lieutenant, I became Public Works Officer of a naval facility in Washington, D.C.  As titular head of a 200-employee department of civil servants, my “subordinates” included many with over twenty years vested interest in their positions and all the rights, privileges, and security which civil service provides.  As an organism, this department functioned as it chose through the terms of a dozen prior Public Works Officers.  My arrival made no difference.  During my three years in charge, I developed a realization of the limitations imposed on the appointed head of any governmental organization.  I’m certain Mr. Cox is now equally aware of these constraints.

Christopher Cox is remarkably talented, graduating magna cum laude from the University of Southern California, recipient of an M.B.A. from Harvard Business School, and J.D. from Harvard Law School.  During 56 years, his record of accomplishment is nearly flawless.  If he can be accused of anything, it was indiscretion in vacating a safe congressional seat after 17 years to assume the mantle of a governmental organization over which he exercised no real authority.  Perhaps that’s justification enough to subject him to the pillory.