Did The SEC Lose Sight Of Its Mission?

Treasury Secretary Henry Paulson talks with reporters after meeting with Congressional leaders
Treasury Secretary Henry Paulson talks with reporters after meeting with Congressional leaders on the current economic crisis Thursday, Sept. 18, 2008 on Capitol Hill in Washington. At right is Federal Reserve Board Chairman Ben Bernanke, 2nd right is Speaker Nancy Pelosi, D-Calif., and second left is Securities and Exchange Commission Chairman Chris Cox. Paulson says the government is crafting a plan to rescue banks from bad debts that are at the heart of Wall Street's worst financial crisis in decades. (AP Photo/Lauren Victoria Burke)
AP Photo/Lauren Victoria Burke

As the nation's financial markets threatened to melt down, one agency taking the heat was the Securities and Exchange Commission.

The SEC was created in 1934, during the Great Depression, to protect investors. But in the current crisis, reports CBS News investigative correspondent Sharyl Attkisson, some say the SEC has lost sight of its mission.

A central figure in the economic firestorm is SEC chairman Christopher Cox, seen Friday morning in an appearance with President Bush.

It was less than two hours after Sen. John McCain repeated a call for Cox to resign.

"There needs to be accountability in Washington," McCain said.

President Bush appointed Cox in 2005 to head up the SEC, where 3,400 employees oversee disclosures of 13,000 public companies.

Before Cox, his predecessor at the SEC, William Donaldson, had drawn ire from some fellow Republicans by passing a host of new market regulations.

And during Donaldson's tenure, penalties against violators were on the rise, peaking at $1.5 billion in 2005.

But since Cox took over, penalties have plummeted by two-thirds, to $507 million last year.

Former SEC attorney Howard Schiffman says lax enforcement isn't the problem - it's that the SEC doesn't act quickly enough.

"Here it's not as important to find out who was responsible for the fire, but maybe should have stopped there ever being a fire," Shiffman.

Just two SEC chairmen have ever given up their office abruptly because of political turmoil.

In 1973, Bradford Cook stepped down during a Nixon campaign finance scandal. And in 2002, Harvey Pitt resigned after the Enron accounting fiasco.

Today, Pitt says the bulk of the problems that led to today's crisis are outside the SEC's purview, and that criticism heaped on Cox and the SEC is unfair.

"Christopher Cox has done, in my view, an outstanding job," Pitt said.

In a statement, Cox gives no sign of wavering, saying the SEC has "responded valiantly" and taken many "decisive actions" in the current market crisis.

  • Sharyl Attkisson
    Sharyl Attkisson On Twitter»

    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.