For Immediate Release
Steve Carpinelli (202) 481-1225
SEC Watchdog Says Financial Reform Bill Jeopardizes Independence
the Securities and Exchange Commission says legislation to convert his
job into a presidential appointment would jeopardize an investigation into whether the White
House and Democratic Party influenced a high-profile fraud case against
Goldman Sachs Group Inc. SEC Inspector General David Kotz told the
Center for Public Integrity that he becomes "a lame duck," which would
hurt ongoing agency probes, if Congress approves a financial regulation
reform bill that changes how the SEC watchdog job is filled.
Kotz announced late last month that he
had opened an investigation into allegations from Republicans in
Congress that Democrats influenced the timing of SEC accusations against
the Wall Street giant. The lawsuit was announced just before the Senate
began debating Democrats' wide-ranging financial regulation reform
bill. That bill would, among other things, change the status of Kotz's
job and those of inspectors general at the Pension Benefit Guaranty
Corp., Commodities Futures Trading Commission, National Credit Union
Administration, and Federal Reserve Board.
The five financial watchdogs oppose
the financial reform bill's language, saying it could compromise the
investigative independence they have enjoyed for years.
There are 69 inspectors general across
the executive branch who police against waste, fraud, abuse and ethical
violations inside their agencies. Some are presidentially appointed and
confirmed by the Senate, while others - like at the SEC -
are hired independently by their agencies.
Sen. Charles Grassley, R-Iowa, a
longtime champion of inspectors general, is offering an amendment that
would protect the five watchdogs and allow them to be removed "for
cause" only through a two-thirds majority vote of the commission or
The White House told the Center it
does not support changing the status of the inspectors general to
political appointees. "The administration does not support in any way
politicizing the function of the Inspector General and we have not
proposed these changes," said a White House official, who spoke only on
condition of anonymity because talks between Congress and the White
House are ongoing.
The Center for Public Integrity is a nonprofit organization dedicated to producing original, responsible investigative journalism on issues of public concern. The Center is non-partisan and non-advocacy. We are committed to transparent and comprehensive reporting both in the United States and around the world.