Thank You Bernie!

The WSJournal’s David Weidner writes: No, this isn't a joke. And, no, Irving Picard, I didn't make money from Mr. Madoff's massive fraud, so call off the lawyers. Still, all of us owe a bit of thanks to Mr. Madoff. After all, without his Ponzi scheme, we might never know how inept, conflicted and wayward the Securities and Exchange Commission has become.

The SEC's failure shouldn't be a surprise. John Kenneth Galbraith, writing in the 1950s, predicted its demise. "Regulatory bodies, like the people who guide them, have a marked life cycle," Mr. Galbraith wrote.

"In their youth, they are vigorous, aggressive, evangelistic and even intolerant. Later, they mellow, and in old age—in a matter of 10 or 15 years—they become, with some exceptions either an arm of the industry they are regulating or senile." If that isn't a fitting description of the 77-year-old SEC, then what is? An SEC spokesman declined to comment Wednesday.

What Mr. Galbraith left out is that regulators like the SEC are very hard to kill. It might be even tougher to reform them, and it takes a catastrophe to spur change in Washington. That is why the SEC's inability to catch Mr. Madoff, despite mountains of evidence provided by whistleblower Harry Markopolos, is so beneficial. Without Mr. Madoff's stunning fraud, pressure on the SEC to change its ways might never have mounted to the point it has reached today.

Now the SEC is under the kind of scrutiny that might just result in real change….

Read the rest at http://online.wsj.com/article/SB10001424053111904563904576585493074643196.html?mod=WSJ_Markets_LEFTTopNews