As if the SEC could be humiliated any more, another piece of disclosure now highlights that Mary Schapiro's useless organization was unresponsive to whistleblower overtures by former Moody's employees attempting to warn the regulator "about Moody's weak compliance department and ratings process."
A congressional panel will expand its examination of credit rating agencies to look at why U.S. securities regulators ignored warnings from former Moody's Corp executives about the company's weak compliance department and ratings process.
"We want to look at the fact that the Securities and Exchange Commission did not respond" to concerns from Moody's former head of compliance, Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee, told CNBC television on Wednesday.
Towns' panel held a hearing on Wednesday to probe allegations from two Moody's whistleblowers that company managers favored revenues over ratings quality.
And here is how the SEC's worthelessness from the Madoff affair has ported over into comparable situations, with the regulator apparently having learned absolutely nothing from the its humiliating episode yet.
Scott McCleskey, a former Moody's senior vice president of compliance, sent the SEC a letter in March 2009 alleging that he was routinely ignored when he warned that the firm was not properly monitoring municipal bond ratings.
Eric Kolchinsky, a recently suspended managing director at Moody's, will tell Congress that analysts are "bullied" by managers who override their decisions to generate revenue.
"Kolchinsky tried to tell the SEC about his concerns but his calls were not returned," according to a memo prepared by Republican members of the committee and obtained by Reuters.
Judging by the SEC's extremely time consuming attempt to cover up for Ken Lewis all throughout the year, we are confident that all parties involved fully understand and sympathize with Mary Schapiro on this one.
And yet the question of whether the SEC, or Moody's for that matter, is needed in any formal capacity going forward remains unanswered:
An SEC spokesman has said the agency has established an examination program for credit rating agencies that includes reviews of disclosures, policies, and procedures regarding municipal securities ratings.
"We are focusing carefully on the tips and complaints we receive and following up, where appropriate, with examinations targeting suspected problems," SEC spokesman John Nester said.
In other words, we are doing all we can to make the lives of our future employers cushy and devoid of any jail time. In the meantime we have an inbox full of tips and concrete information that highlights criminal activity that we may actually open up some time in 2018, or by the time the SEC is dissolved with impunity for being a $900 million annual drain of taxpayer money, whichever comes first.