Warren, a Harvard Law school expert on bankruptcy law, has been the head of the TARP oversight panel and a financial superhero for her ability to leap tall buildings in a single bound while at the same time explaining credit default swaps and the economic meltdown in plain English!

There can only be one reason for the hesitance — Wall Street’s influence on Washington.  Who used to work on Wall Street?  Treasury Secretary Timothy Geithner — one of Obama’s team who is apparently most opposed to her. The other two in the running are a former lobbyist and a career government official. Oh, and they’re both D.C. establishment white guys. I hate to bring this up, but we haven’t really done very well when the establishment white guys ignored the common sense advice of women financial experts.

I’m just sayin’.

Some claim she can’t be confirmed by the Senate, but it turns out that might not even be an issue.  If she does have to be confirmed, I think that’s only a “problem” because so many Senators take campaign money from Wall Street and big banks.

The real reason those already in office and in power think Elizabeth Warren is controversial is because she speaks the truth and she does it in plain English so people can understand (except for the part about credit default swaps and the derivatives — for that, you need to read The Big Short.)  She’s not afraid to tell us if the emperor has no clothes.

I have no doubt that Warren would get in there, roll up her sleeves, keep that blondish hair behind her ears, and get to work yesterday.  Those other guys?  Their CV’s scream status quo, and that’s just what we don’t need when it comes to trying to level the playing field just a little bit for Americans whose economic lives are in meltdown.

I don’t even want to think about what’s going to happen to our economy if the president leaves it to the insiders again to “fix” things for the American people.  I’d rather have the real watchdog — the one with the bark and a bite.

Image courtesy of the Huffington Post

I had hoped to get a real update on where things stood with Wall Street — after all, you can take the girl out of the Securities & Exchange Commission, but you can’t take the SEC out of the girl!   It was no surprise to me that he didn’t — or couldn’t — say much because the Senate and the House of Representatives are at that touchy reconciliation phase of  hammering out final legislative language.

I was a little taken aback, though, when I asked his response to the news stories that have been critical about the proposed legislation that’s supposed to protect us consumers from the big bad Wall Street wolf.  He was a smidge defensive, asking me why I would even think to pose such a question.

Actually, I thought it was one that a lot of people would want the answer to — that’s why I asked.  I responded in what I thought was a respectful way — as I believed my original question had been — trying to rephrase so he’d understand I just wanted to hear his take on it, and that I wasn’t attacking him or the process.  Plus the former SEC-staffer in me has a real interest in knowing how we’re going to move beyond the “disclosure is all you need” theory of Wall Street rules, because there’s no question that leaving hen house protection up to the fox hasn’t turned out so well for anyone but the fox.

If I needed any reminding about that, I’ve found it in Michael Lewis’ new book, The Big Short: Inside the Doomsday Machine, which details in an easily readable way (except for all the financial instrument acronyms) how our economy was brought down by overarching sub-prime mortgage greed.  I know my libertarian friends will think I’m crazy calling for more regulation, or more effective regulation, when they think the mortgage mess is really just about personal responsibility.  But I do think that’s what is needed because after reading The Big Short, and other books like Den of Thieves, there’s just no question that we don’t stand a chance against the guys who come up with all these investment ideas.

I’m all for personal responsibility when it comes to financial commitments, but when you’ve got investment bankers creating instruments specifically for the purpose of tricking people into thinking they can afford something they can’t and then taking the opposite side of betting against them, that’s when I say it’s time for some effective regulation by skilled regulators.

Even what seem like straightforward investments like our 401(k)’s are impacted by the money and influence of Wall Street.  According to the House Education and Labor Committee, Wall Street lobbyists have been able to use their money sway to have fee disclosure requirements taken out of the pending bill.  Now, while I generally don’t sit around reading 10Ks (anymore!), I do want to know what kind of fees are associated with a 401(k) or a mutual fund I’m investing in – some fees can be small, but some can be 20 percent or more.  I’m betting you’d probably like to know about that, too.  Actually, it looks like 50 million of us do since that’s how many of us are trying to sock a little away in those investments. The disclosure requirement was in the House version of the bill, but for some reason Senator Max Baucus took it out of the Senate version.  Maybe that’s because he’s a little too chummy with Wall Street?

I know Senator Reid was thinking that a call with a few “mom” bloggers would probably focus on some kinder, gentler issues, but I hope he wasn’t scared off and I hope he and others will continue to be willing to actually answer our questions about financial reform and other topics we’re interested in, because we reall do care about more than just exercise for our kids and how much high fructose corn syrup is in their snacks.

We’re just trying to save and get by like so many other people and we’re up to asking the hard questions.  I hope our lawmakers will be up to answering them.

Because they’re pretty much the only thing that stands between us and the next financial collapse of the American economy.

TIME Magazine’s cover story this week is called, The Sheriffs of Wall Street.  And those sheriffs aren’t who you might expect — they’re Elizabeth Warren, head of the Troubled Asset Relief Program (better known to us as TARP), SEC Chair Mary Schapiro and FDIC Chair Sheila Bair.  These are women who should be in everyone’s address book, because we all ought to be sending them thank you notes (and I bet they wouldn’t mind a little FTD bouquet, either!).

The TIME article takes a look at the ongoing battles these three are fighting to put our economy back on the right track and the uphill fight they’re facing because the men who are used to being in charge don’t want to change the regulatory status quo.

It reminded me of another TIME Magazine cover on a similar subject just a few years ago:

The current TIME article has an interesting undercurrent that, as someone who spent a good number of years at the Securities and Exchange Commission and experienced the macho culture of finance,  I’ve thought about for a long time — would the seemingly non-stop run of bad “masters of the universe” type of decisions be different if more women were in charge?

No one listened to the WorldCom and Enron whistleblowers.  The men in charge at those corporations, as well as at the FBI, poo-pooed the concerns that women raised.  They were dismissed out of hand and we all remember how that turned out.

Similarly, one former “sheriff” not on the current cover of TIME is Brooksley Born, the former head of the Commodities Futures Trading Commission (one of the many regulators with an eye on investments) who pushed for more than just voluntary regulation of the financial derivatives market, sensing that bad things were looming.  It turns out she was right — really right.  Yet her concerns and ideas about how to avert our economic collapse in 2008 were dismissed out of hand and the men in charge at the time (with their personal connections to Wall Street) kept us on the road to what the Washington Post described as bringing the world’s trading markets, and our economy, to “the brink of collapse.”

Now as regulators are trying to put things back together to prevent another meltdown, Warren has little power as head of TARP other than to make suggestions to Capitol Hill, Schapiro is suspect because of the misbehavior of some staff attorneys, and it’s been widely rumored that Treasury Secretary Timothy Geithner is trying to push Bair out.

I know there are plenty of people who will dismiss this idea out of hand that women would do a better job of running and regulating Wall Street.  But I’m not the only one who’s been mulling this over.  New York magazine published an article in March titled What if Women Ran Wall Street?  In January, the New York Times weighed in with Where Are the Women on Wall Street? Both tell stories of hostile atmospheres that force women out if they don’t tow the line that the big boys with a taste for risk and big money draw in the sand.  And Jessica Pieklo, another woman professionally familiar with the world of investments, says at her blog, Hegemmommy, that she’s not sure if things would necessarily be different if more women were running the financial and regulatory show, but raises this issue about the long-standing culture of Wall Street:

[If you] create a work environment that views accountability as a  weakness, [you] create a work environment hostile to women.  It’s as simple as that.

And that’s the problem, isn’t it?  Accountability.  The boys who run the financial show aren’t nearly as concerned about that as many women in the industry.  Another example of Venus and Mars?  Who knows for sure, but why not let the women take over for a while?  Things can only get better at this stage of the game.

As even Treasury Secretary Geithner recently admitted when asked about the What if Women Ran Wall Street? article, “How, you might ask, could women not have done better?”

Hear, hear!  I say, it’s time to bury the macho and the let “girls” get to work.

Images from TIME Magazine.

I spent several years there before I was a “recovering attorney” — first as lawyer in the Enforcement Division who investigated a variety of securities fraud cases and then as Deputy Director of Public Affairs, where I dealt with reporters all day about cases being brought and how the agency worked.  Granted, it’s been a few years since I walked around the halls of the agency known as the Investor’s Advocate, but my guess is that for the most part things aren’t so different, except that this relatively small government agency is everyone’s favorite whipping boy right now.

But as cable news shows and newspaper headlines focus on Wall Street reform, Goldman Sachs, the mortgage crisis and the economy (that still isn’t so fine, thank you very much), I just wanted to weigh in on why the mess we’re in is less the fault of the Securities and Exchange Commission than it is of the lawmakers who are all pounding their fists, wanting you to believe that either they’re trying to change the status quo or that changing that status quo will only make things worse.  The real problem is this –

Wall Street isn’t afraid of the SEC.

They never have been and they never will be as long as the agency is structured as it is — one that brings only civil, not criminal, cases.  The handful of men who run our nation’s investment banking institutions aren’t afraid of consequences that they consider to be mere slaps on the hand from an inconsequential agency.  The SEC can only take money from these Masters of the Universe.  These guys make gobs of money all day, every day and know that they’ll make more money tomorrow (can you say credit default swaps?).  Losing a little of it is just a cost of doing business to them, so you don’t even come close to getting their attention unless you can take away their ability to make more money — like when you say the word ‘prison.’  And the only ones who can bring criminal charges against them are the Justice Department and state Attorneys General.

The SEC might find a case and investigate it.  The SEC might be the agency that does all the grunt work when it comes to digging for the dirt.  But it can only stand by at the photo op when the criminal authorities start talking about the big house.

Think about it in this smaller, non-investment banking securities case — do you really think Martha Stewart batted an eyelash over her $30,000 fine after alleged insider trading?  Or do you think she was more concerned about what five months in the slammer would do to her reputation, her business and the stock price of Martha Stewart Living Omnimedia?

So, when it comes to the fraud currently alleged against Goldman Sachs — and cases that the SEC investigates every day — is it any wonder that the Richard Fulds or the Lloyd Blankfeins of the investment world treat SEC investigations with about the same amount of disdain as they would a pesky mosquito?

The Securities and Exchange Commission has the authority to subpoena documents and testimony, but corporations can and do drag their feet for years to delay any actions.  This tactic is a good one for those being investigated, because Wall Street also knows that: (1) it takes forever to enforce those subpoenas, and (2) that there’s a lot of staff turnover at the SEC.  Corporations and Wall Street big wigs know that a staff attorney there is like the weather — if you don’t like it, you don’t have to wait too long for it to change.  And when that happens — when underpaid staff attorneys leave to seek their fortune at a big law firm or one of those Wall Street banks — a new attorney inherits an old case they usually couldn’t care less about.

So, unless and until the SEC can find a way to instill some fear when it comes to enforcing the nation’s securities laws, few will believe there’s much to lose by failing to cooperate when civil cases are filed.  It’s a Wall Street mindset that’s existed as we’ve moved from Den of Thieves to Liar’s Poker to the internet trading bubble to today’s mortgage investment crisis.  Not to mention that when major investment banks are big contributors to lawmakers’ campaigns and former Goldman executives get plum jobs in the government, it doesn’t seem likely that there will be any fear on Wall Street in the near future.

That’s probably good news for Gordon Gekko and his real life counterparts.

P.S. — I have a feeling that Jon Stewart agrees with me.

Why do things need to change in the world of financial regulation? Greed, greed and more greed.

Barack Obama says neither he nor anyone on his staff did anything wrong regarding his former Senate seat.

Caroline Kennedy, while initially reluctant, now says she wants Hillary Clinton’s senate seat. Looking like a mid-life crisis decision?

Reflections on the white, hot spotlight that Alaska politics received from the second most famous mother in Alaska.

And, “honestly, who throws a shoe?“

Stupid.

Exactly the right word for the reason we are in the current financial mess we are in. Why? Because it is a mess that’s the making of those in charge, both in Washington, D.C. and the myriad special financial interests who have their ears.

John McCain blames the chairman of the Securities & Exchange Commission? The White House says institutions failing and the stock market going in the tank are just about “market corrections.” What the …?!?!?

As a former SEC attorney, I have a couple of things to say from an “insider’s” perspective.

No matter who is running the show in the White House or on Capitol Hill, lobbyists and corporate interests have a huge voice in influencing how the rules and regulations of the SEC are crafted, as well as others like the NASD and banking regulators. Maybe not officially, but believe me, there’s puh-LENTY of pressure to water down proposed rules that would give more government oversight and investor protection.

Sometimes they win.

Regardless of whether something would protect investors or make financial institutions more accountable for what they do, how they do it and how they account for it, lobbyists and special interests are always right there to whine — It would be too much work to implement those regulations and safeguards! You can trust us, the market is a good regulator! We know what happened in the 1980s — it will never happen again! We promise!

And on top of that, no matter how much regulators tried to get the budgets they really needed to have the staff necessary to do their jobs right, someone was always there to convince Congress that underfunded, understaffed agencies just didn’t need any more help.

What’s happening today with our economy is a direct result of corporate money and interests trumping the meager resources of government regulators. When agency heads trudge up to Capitol Hill every year to make the case for increased funding so they can do their jobs as effectively as possible, I’m sure you can guess who is right on their heels to make sure that doesn’t happen.

There was a reason the movie Wall Street resonated with so many — things in the real world are always more Gordon Gekko than the Geico Gecko.

That’s why we keep having scandal after scandal after scandal. It’s not because investigators at the SEC aren’t doing their jobs. They are. I know. They just don’t have the time or resources to do it all in a world where the guys who want to keep making the big money have more power and influence than the ones trying to make sure small investors can keep their little money.

Obviously, SEC Chairman Christopher Cox bears a good amount of the responsibility — he could have stood up to the Bush administration and pushed harder to have more SEC “cops” on the street. But he’s not the main culprit, he’s just the one who will be expected to fall on the sword for George Bush. They ones who are really at fault are the ones who have the enormous golden parachutes, no matter whether their financial firms fail or succeed.

And it will happen again in the future unless the regulators get what they really need. You can take that to the bank.