Former SEC Chairman Arthur Levitt decided to unleash on the city of San Diego yesterday in an interview broadcast by Bloomberg. (Click here and click on the video to the right or just read my transcript below.)
You’ll remember that Levitt was the symbolic head of the committee led by Kroll Inc. that investigated San Diego’s ills (for the slight cost of just more than $20 million).
Here’s what he had to say:
The problems we have in U.S. corporate pension funds pale compared to what’s going on in municipal markets … It’s a huge market — it’s almost like an oriental bazaar. We know so little about it. The reason for that is kind of an arcane law called the Tower Amendment, which prevents the SEC from overseeing the municipal market. Chairman (Christopher) Cox has made a major priority of going after the municipal market to get greater transparency and disclosure and he’s right on following on the scandalous activities in San Diego, which is underwater in terms of their pension funds and the issuance of bonds in which investors had no way of knowing what was going on. Repealing the Tower Amendment, which has to be done by Congress, is the way to go.
And here’s an interesting addendum: The host asked him if he was surprised that the SEC hasn’t fined anyone in San Diego for what happened.
I don’t think the last chapter has yet been written. These were errors made not out of the wind. These were errors made by individuals and I think it’s essential that the SEC go after individuals who acted fraudulently against the people, the citizens of San Diego.