My friend and long time colleague Broc over at TheCorporateCounsel.net drafted an endorsement of the recent nomination of Mary Schapiro as the new SEC Chairperson. He was defending her against a piece by Steve Pearlstein in the Post. Broc and I were both on staff at the SEC in the early 90’s when Ms. Shapiro was a young Commissioner.

A major point on the SEC Chair nomination and other related noms is – why have any confidence in people who did not see any of this coming and prepare the financial and political community by taking action?

I’m more with Pearlstein on the Schapiro nom. With all the risk and fallout that remains ahead for the nation’s economic well-being and with the damage still being determined at the SEC re: it’s culpability in market oversight, including honestly measuring its means to have favorably altered the outcome, there’s nothing about Ms. Schapiro that demonstrates she’s got the analytical depth and political/industry resources to shape a lasting, meaningful policy solution and shift.

Anybody that would be considered good as a financial steward saw the problem build for five years. Just looking at price behaviors in commodities & leverage ratios apparent in the Pvt Equity mania/spend told anyone that was looking that levered money supply was behind everything, not structural integrity of the markets and real supply/demand.

It wasn’t doing any good to point out fragments of systemic derivative risks in speeches. The cacophony of fools taking down large sums from fee income would mute your siren in minutes. As CFTC/FINRA head you build the case and take it around DC because it was about showing that all banks (globally) had become so co-dependent through derivative risk that a single point of failure would track through the whole model and then the leverage would unwind and down it would all come (i.e. ARM lending dependent on home price appreciation from perpetual flipping not real underlying income growth).

Ms. Schapiro wasn’t out there with that kind of action. Few were but there were some and that’s who should be holding up their hand and taking the big office at 100 F Street.