The President's Authority to Fire the SEC Chair -- One Paper Makes a Correction:
After Senator McCain announced that he would fire SEC Chair Chris Cox, many media outlets (wrongly) reported that the President lacks such authority. In fact, the President can remove the Chair of the Commission for cause, and may remove a Commissioner for cause. Nonetheless, the likes of Keith Olbermann mocked Senator McCain's comments, even though McCain was essentially correct (and the NBC News correspondent upon which Olbermann allegedly relied had been told as much by yours truly the same day Olbermann went on the air).
Few media outlets ever corrected their error. Thus it's notable that the LA Times ran the following correction in yesterday's paper.
SEC chairman: Articles in Section A on Sept. 19 and 20 about the financial rescue plan said the president could not fire the chairman of the Securities and Exchange Commission. The statute governing the SEC does not explicitly give the president the authority to fire the commission's members. However, federal courts have held that the president can remove members of independent commissions like the SEC "for cause," including "inefficiency, neglect of duty or malfeasance in office." The president can also demote the chairman of the SEC without removing him or her from the commission.Thanks to Patterico for the pointer (and hounding the LA Times to issue the correction).
Is this enough “for cause”?
I would think that the billions of dollars of FTDed shorts that happen year after year without anyone ending up in the clink is reason enough to clear the bench from the chairman to the bat boy. The fact that they've been scrambling the last month does nothing about the years that the practice has been ignored.
For myself, I'm wondering why the exchanges tolerate this - why they don't make their member brokers cover these transactions. For every FTD short there must be a buyer somewhere who ends up without the stock she thought she was buying. Seems like this result would undermine people's willingness to use the exchange.
Can someone more fully explain and/or link to an explanation?
Most people do not actually take physical posession of the shares, so the short is on paper. If I buy the stock, it will show up on my statement. I'll never notice that it didn't arrive.
The broker/dealer who was expecting to see it arrive in their DTC vault will indeed notice it missing, but it ends up nothing more than a number on a report.
Note that they might possibly loan those shares out again, based on the assumption (cough cough) that they'll be receiving them soon. And so on, and so on, and so on.
And that's where Cox is at fault. He is on record as saying that the problem of FTDs was simply too big. According to him, enforcing that rule would have an adverse affect on the market, so he chose to simply disregard the rule.