The lede in Edward Wyatt’s piece on the SEC yesterday pretty much says it all:

Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.

I know, I know: you’re shocked. Me too. No one could have anticipated . . .

Says Wyatt:

An analysis by The New York Times of S.E.C. investigations over the last decade found nearly 350 instances where the agency has given big Wall Street institutions and other financial companies a pass on those or other sanctions.

Folks who have followed the banking mess discussions here at FDL have seen post upon post upon post, pointing this very thing out. Posts like:

Marcy Wheeler: SEC Inspector General: Yes, BoA Got Special Treatment

masaccio: SEC Enforcement Chief Whines that Trying Cases Takes Lots of Effort

Cynthia Kouril: Oversight Done Right: Judge Rakoff Rejects SEC-BofA Settlement

We’ve taken part in Book Salons with folks like Simon Johnson, Yves Smith, and others, hosted by experts like Bill Black (more here and here). These folks are well-versed in the ways of Wall Street and DC when it comes to the oversight of the financial services industry, and the back-and-forth is often quite enlightening. For example, in the comments of Simon Johnson’s chat hosted by Bill Black, BooRadley asked a very pointed question aimed at the cozy bank-friendly culture at the SEC:

Harry Markopolos confirmed many of the same concerns you are raising. Can his fame as the Madoff whistleblower be leveraged in some way against the too big to fail banks?”

Bill Black, the host of the chat, replied

Harry has a manner that makes a number of unnecessary enemies. We inherently make a lot of enemies when we take on the financial oligarchs. Harry got Madoff absolutely right. The SEC needs to [be - sic] rebuilt and that requires broad changes in leadership. Harry could greatly improve their analytics.

Bill points to the very problem behind the Wyatt article: the mindset of the leadership of the SEC.

And who would know that leadership better than the employees of the SEC . . .

Every year, the nonprofit and nonpartisan Partnership For Public Service produces a report called “Best Places To Work in the Federal Government.” They describe their methodology like this:

The Partnership for Public Service uses data from the Office of Personnel Management’s Federal Employee Viewpoint Survey to rank agencies and their subcomponents according to a Best Places to Work index score. Agencies and subcomponents are not only measured on overall employee satisfaction, but are scored in 10 workplace categories, such as effective leadership, employee skills/mission match, pay and work/life balance.

The Best Places to Work rankings provide a snapshot overview of each agency and subcomponent, trend data and expert analysis of what the results mean.

The 2011 report was released last November, and their analysis of the results included a comparison of the FDIC and SEC, two of the leading agencies with oversight responsibilities in the financial system (emphasis added):

Amid enormous pressures and greatly increased workloads stemming from the nation’s financial crisis, the Federal Deposit Insurance Corporation (FDIC) has risen to the top of the Best Places to Work in the Federal Government rankings, while the Securities and Exchange Commission (SEC) has experienced a continual decline in employee job satisfaction and commitment.

The FDIC, which has devoted time, energy and resources to supporting employees and creating a positive work environment, moved from third place in 2010 to first place among large agencies in the 2011 Best Places to Work rankings. In contrast, the SEC dropped to 27th place out of 33 large federal agencies in 2011 after having been ranked 24th in 2010, 11th in 2009 and third in 2007.

The FDIC recorded a Best Places to Work score of 85.9 out of 100, an 8.5 percent jump from 2010. The 2011 score represented the largest percentage improvement for any large agency. The new rankings also placed the FDIC first among large agencies when it comes to employee views on overall effective leadership, senior leaders, the match between skills and mission, strategic management, teamwork and pay. . . .

The SEC scored 58.3 out of 100 on overall job satisfaction and commitment in the 2011 Best Places to Work rankings, representing a 5.9 percent decrease from 2010. This was the second biggest drop among the large agencies. The SEC’s low scores reflect increasingly negative response by employees regarding agency leadership, strategic management and a number of other workplace issues.

The contrast couldn’t be starker. Drilling into the details, two sub-categories are especially damning to the leaders of the SEC. Best Places describes “strategic management” like this:

The strategic management category measures the extent to which employees believe that management ensures they have the necessary skills and abilities to do their jobs, is successful at hiring new employees with the necessary skills to help the organization, and works to achieve the organizational goals with targeted personnel strategies and performance management.

The SEC was ranked by their own employees 30th out of 30 large organizations; the FDIC was 1st.

Effective Leadership – Leaders:

The Leadership – Leaders category measures the level of respect employees have for senior leaders, satisfaction with the amount of information provided by management, and perceptions about senior leaders’ honesty, integrity and ability to motivate employees.

The SEC was 29th of 30; FDIC was 1st.

Are you noticing a pattern here? The leadership of the SEC is not respected by the folks that know them best — their own employees — nor are they respected by the financial institutions they are supposed to oversee. The result is that TBTF banks treat the SEC as a doormat, and they are shocked when someone like Rakoff calls them out on it.

Felix Salmon summed it up well yesterday:

Right now, the fines banks pay to the SEC are like protection money: they pay a few million bucks here and there every so often, and in return get to continue doing whatever they like. It’s time the SEC put a stop to this. But I’m not holding my breath.

He’s right, but I’m not holding my breath either.

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photo h/t to marstheinfomage