Lest someone claim that I am but a DC-hostile, fed-fighting small “l” libertarian, let me be the first to say: Much respect goes to the GAO for their response to a Deep Capture story.
Readers of Deep Capture may have noticed that, while I may not be on the best of terms with some federal institutions (e.g., the SEC), I have sought to be respectful to individuals serving the public in whatever capacity, and especially, to those institutions which appear to me to be part of the solution and not part of the problem. For example, recently I wrote of the Congressional Research Service, “The CRS is one of the most respected institutions in Washington, DC, and its output is universally considered non-partisan, objective, and thorough” (“It Only Hurts When I Laugh“). And in June of 2008, in an essay (“So You Say You Want a Revolution?“) now linked to dozens of times through this site, I wrote of the GAO:
Another place you can turn is the United States Government Accountability Office. The GAO is probably the most respectable group in DC (setting aside the military). When Congress needs a non-partisan, no-bullshit answer to any question, they turn to the GAO. Write Chuck Young at email@example.com and let him know about your interest in naked short selling and the general issues raised in DeepCapture.com.
Notwithstanding such general warm sentiments Deep Capture feels towards the GAO, a recent GAO publication (“Securities and Exchange Commission: Oversight of U.S. Equities Market Clearing Agencies“) disappointed my Deep Capture colleague, Mark Mitchell, enough for him to write a fairly scathing analysis of it (“Our Watchdogs and the Financial Scandal of the Century“).
Today the GAO’s Orice Williams (“Director, Financial Markets and Community Investment, US GAO”) has responded to Mark Mitchell’s story, to the great credit of the GAO and Ms. Williams herself. Because one can fairly read her intent to be one of public response (Ms. Williams has, in fact, posted this in the comments on Mark’s story), out of courtesy to Ms. Williams and respect for her organization I am reproducing her response here, in full, so that it not be lost among the comments of others.
———- Forwarded message ———-
From: Orice M Williams
Date: Wed, Apr 8, 2009 at 4:12 PM
Subject: Mr. Mitchell,
On March 26, 2009, GAO issued a correspondence entitled Securities and Exchange Commission: Oversight of U.S. Equities Market Clearing Agencies. It was an interim product of an ongoing study on Regulation SHO and not, as mistakenly stated in the article, a report on the findings of an “investigation.” The March 2009 correspondence was issued as an interim product to provide Congress and the public with a descriptive overview of how U.S. clearing agencies settle and clear equities securities trades and how SEC oversees the clearing and settlement systems of these agencies through its examination process. Therefore, the information provided was descriptive and not intended to evaluate SEC’s oversight of clearing agencies or to provide detailed information on examination findings. Further, as is the case with all GAO reports, the March 2009 correspondence provided an introduction that explained why GAO did this work. In this case, as noted in the letter, GAO did this work because of the importance of an effective clearance and settlement process. This is our standard reporting format and is neither strange nor uncommon. GAO’s final report on Regulation SHO and SEC’s efforts to address failures to deliver and naked short selling will be issued in May 2009.
I have posted this information as a response to your article. However, I also wanted to bring it to your attention.
Orice M. Williams
Financial Markets and Community Investment
If I know Mark, he may have something to write in reply. In the meantime, however, the publication of this GAO letter is required, I believe, by those very principles of journalistic integrity which Deep Capture was established to illustrate and defend.
And to Ms. Williams I say: Much respect indeed.