2:30 pm on April 28, 2004, did you know where your SEC Commissioners were?

Stephen Labaton, in an article he published October 3 in the New York Times, provides a close up look into one of the most arcane moments of 2008, so far.  Labaton explains how an obscure Securities and Exchange Commission decision led to an out of control financial crisis.  Read it, and you'll see why Senator John S. McCain, on the day he was quoted as saying, "If I were President of the United States, I would fire Christopher Cox today.  (That's Mr. Cox, on the left, chairman of the Securities and Exchange Commission, and Roel C. Campos, on the right, at a House hearing in 2007. Mr. Campos was on the commission in 2004 when a decision was made to change the net capital rule for big investment banks.  Mr. Cox appears to be listening out of both ears.)  As recently as March 11, 2008, Chairman Cox has said, "We have a good deal of comfort about the capital cushions at these firms at the moment.”  How do you like that?  I've read Labaton's article, silently.  I've read it, out loud.  I've read it to anyone who will listen.   And I ask the same question every time: how could Mr. Cox have been so wrong?  Give it a read. 

The editors of the Times, with whom I disagree often, published a 4 minute slideshow of the April 28, 2004 meeting (pay close attention to Item #2) between SEC Commissioners and the heads of JP Morgan, Lehman Brothers, Merrill Lynch, Bear Stearns, and Goldman Sachs, in a basement conference room at the office of the SEC.   Reading the article and viewing the audio slideshow won't lower your blood pressure, but it will provide valuable insights that the talking heads haven't. 

I'm interested in what you think about this.  I invite you to use the "comments section" found beneath this post.