The Securities and Exchange Commission has had a very bad couple of months. As a result of its successive oversight failures and selective enforcement of the nation’s securities laws and regulations, so have the nation’s financial sector, economy and taxpayers. Unfortunately, there is reason to believe that the SEC has another – and potentially even more problematic – “shoe” about to drop.

First, there were the successive meltdowns of publicly traded financial corporations for which the SEC must bear some measure of responsibility. As the Associated Press put it, the agency’s own “inspector general determined that the agency’s monitoring of the five biggest Wall Street firms, which included Bear Stearns, was lacking.” Everyone also recalls Warren Buffet’s warning that derivatives such as subprime mortgage securities were “financial products of mass destruction.”

Then came last week’s revelations by the SEC’s chairman, former California Rep. Christopher Cox, that the agency had repeatedly had “credible and specific allegations” brought to its attention “since at least 1999” concerning the self-confessed shyster-financier Bernard Madoff. Had the staff of the SEC (which included an attorney married to Mr. Madoff’s niece) not persistently looked the other way, these warnings should have been sufficient to prevent what ultimately

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