April 8, 2011
Some of you may remember the “Diamond Crash” many years ago, a tragic loss of four pilots and their jets in a daredevil Thunderbird flying show in Arizona. Due to a rare malfunction in the lead plane, causing it to go off course, the leader of the flying “V” led the three following jets—whose pilots are taught to follow the leader with exacting, unwavering precision, blindly following the leader, if you will—into a tragic, fatal dive.
There’s a lesson in this for those engaged in the current budget debate. It is following a kind of blind rhetoric that has pulled some of our leaders to the point of a full-blown government shutdown. And the harm to be caused is potentially incalculable. In our agency, we are preparing to let markets and market participants know what we will NOT be able to do during a lapse. This is dangerous territory. We are just coming out of the worst economic calamity since the Great Depression, and certain members of Congress are playing a game of chicken—arguing over a miniscule percentage of the total budget—putting that recovery at risk once again.
Our agency will not be able to staff key market surveillance and oversight functions during this period—only the most minimal services necessary to “protect property” and prevent market dislocations will be undertaken, and even then only in the event of emergency situations. We will go from several hundred people overseeing the markets to less than a handful. Other oversight functions, such as contract approvals, registrations, and other important transparency functions such as the availability of certain public reports, will not be done, and anything currently on our plate will be suspended and the timetables tolled. In other words, current Commission activity, but for necessary market oversight, will come to a screeching halt. Ultimately, the concern is that the costs to be borne by this will fall on—you guessed it—the American taxpayer. Playing catch-up will not be cheap, and the costs for lack of oversight during a shutdown—both in terms of economic loss and possible market harms—could be enormous.
This is not what we, as public servants, should be about. It’s time to put the rhetoric aside, and take the blinders off. And keep the lights on for the federal government, for the benefit of the American taxpayer and consumer.
Last Updated: April 8, 2011