Solomon: Are you saying the S.E.C. under Schapiro is about to catch fraud on Wall Street?
Markopolos: She has the wrong staff. They’re a bunch of idiots there.
Solomon: What do you mean?
Markopolos: The five commissioners of the S.E.C. are securities lawyers. Securities lawyers never understand finance. They don’t have the math background. If you can’t do math and if you can’t take apart the investment products of the 21st century backward and forward and put them together in your sleep, you’ll never find the frauds on Wall Street.
Solomon: So why doesn’t the S.E.C. hire finance people? Why don’t they hire you?
Markopolos: They’re overlawyered. They’re poisoned by lawyers.
Smith has a possible solution - hire some financial experts! He writes,
We now require at least one member of the audit committee of a public company to be a "financial expert," but where are the financial experts at the SEC? Maybe bolstering the investigative staff with forensic accountants would be sufficient, but if the leadership sets the tone for the agency, wouldn't the appointment of commissioners with experience in forensic accounting be worth exploring?
Makes sense to me. Most lawyers have little expertise or real understanding of most of the fields they litigate. Kind of like....journalists!
Of course this is the government we are talking about. So if something actually makes sense, there is probably very little chance the lawyers who make up large sectors of the government will actually do anything constructive. That would reduce their opportunities for bribery and graft, after all! Hat tip to Glenn Reynolds.