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Breaking: SEC Porn Story is Several Months Old

» 15 comments

It was one of the biggest stories of last week, an irresistible metaphor-made-real. While Wall Street was having its way with the US economy, employees of the Securities and Exchange Commission were literally playing with themselves. What wasn’t widely reported, though, was that the story was several months old, and was revived by opponents of financial reform, who thought it would be an effective counter to news of the SEC’s fraud complaint against Goldman Sachs.

In fact, the only thing new about this story is a memo that SEC Inspector General H. David Kotz put together detailing several years of porn-watching investigations, investigations that were reported on in February. The story didn’t gain much traction then, probably because the media were focused like a moon-based death ray on health care reform. It also didn’t catch on in March, when Gawker published leaked documents of the investigations.

Then came the April 16th story of the SEC’s fraud complaint against Goldman Sachs. The tale of heinous public betrayal hit on the very same day that Republican senators unanimously declared their opposition to Senator Chris Dodd‘s (D-CT) financial regulatory reform bill in a letter to Senate Majority Leader Harry Reid (D-NV). The juxtaposition was such an embarrassment that it instantly shifted the momentum, with some predicting that the Dodd bill could even pass with 70 votes.

The Republicans’ response should tell you all you need to know about whether they should be trusted within 500 yards of our economy. First, they focused their outrage, not on Goldman Sachs, but on the SEC and the White House, accusing them of timing the fraud complaint to bolster support for financial reform. They demanded an investigation, and got one.

On Thursday, less than a week after the Goldman Sachs complaint broke, ABC News was first to report on the SEC porn memo. Republicans like Rep. Darrell Issa (R-CA) immediately seized on the story as evidence that financial regulatory reform should be put on hold:

“This stunning report should make everyone question the wisdom of moving forward with plans to give regulators like the SEC even more widespread authority”

This makes about as much sense as saying that we shouldn’t enact any new criminal statutes until we figure out a way to neutralize Dunkin’ Donuts. While the stupidity of this is incredible, you can’t really blame them for taking a swing at it. It’s just standard political opportunism, right?

Wrong. This story didn’t just happen to drift by at the opportune moment. That memo was requested, and released, by Senator Chuck Grassley (R-IA). While initial reports on this story mention that Grassley requested the memo, it’s only as an afterthought, and none of them mention the prior reporting on this story. What, did Grassley have some kind of Spidey-sense that told him to take a shot in the dark that there might be some perverts working at the SEC?

CBS News’ Bob Schieffer even interviewed Grassley, and in doing so read a portion of the SEC’s statement that was left out of most reports, which pointed out that this story broke in February. Schieffer dismisses it, and never asks Grassley if there’s a connection between his release of this memo and the Goldman Sachs complaint.

Furthermore, none of these reports really tries to put the SEC’s porn problem in context. They all omit the fact that the IG’s memo includes SEC contractors as well as staffers, and none of them mentions that those 33 cases are out of more than 3,500 SEC employees. That’s less than 1%, versus research that suggests that 25% of all employees spend time surfing for porn.

Why omit these clearly relevant details from this story? I can only guess that a completely fresh story with the word “porn” in the headline is a much better sale than a warmed-over memo that rehashes a months-old story.

There were some later, lower-profile reports that drew these obvious connections. The New York Daily News, for example, even asked the SEC about the connection between the porn report and the Goldman Sachs complaint, and recent Pulitzer winner Pro Publica pointed out that they reported on the SEC’s porn problem in 2008.

The SEC porn story is an outrage, but the fact that the Republicans equate it to the Goldman Sachs fraud complaint is a greater outrage, and the media’s complicity trumps both. People often try to discern a partisan bias in the media, but this is further evidence that, if there is a media bias, it’s towards clicks and eyeballs, and the almighty dollar.

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  • The Real Royal King

    Good reporting here, Tommy. Many thanks.

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  • Moderate

    Since it is nearly impossible to fire a government employee, it is common to assign them to a desk with nothing to do, so they spend the day browsing the Internet. I always wondered how the ones that actually worked put up with this but that wrote it off as “that is the way things work”.

  • ImNotBlue

    The Real Royal King says:
    April 26, 2010 at 8:57 am

    Good reporting here, Tommy. Many thanks.

    So the above (which contains gems like this: “The Republicans’ response should tell you all you need to know about whether they should be trusted within 500 yards of our economy.”) is your definition of a “report?”

    Tommy is advocating his political ideology… and that’s fine, it’s a column, he has every right to voice his biased opinion in this forum. But for you to think it’s a “report,” and not an “editorial,” show’s how warped and confused the left’s opinion of “journalism” truly is. It does go a long way to explain why the far left (as you are) thinks the media is “biased-right.” When a post like this can be called a “report,” you know the scales of reality are WAY off.

  • m

    SEC Porn story is a prime example of conservative bias in the media.

  • Tommy Christopher

    INB,

    it’s no secret that I’m a liberal, but I fail to see what “political ideology” you think I’m advancing here, other than honesty. Despite appearances, one way or the other at times, this is not a partisan issue.

    The sentence you zero in on is supported by the facts, but if you have a rebuttal, I’d be glad to hear it.

  • valkyrie101

    Only the really stiff necked can go from nearly a complete world-wide financial meltdown in the fall of 2008, to begging for a socialist bailout, to then arguing that there is no need to regulate the securities industry. LOL Of course, the men with the billions of dollars in that industry own more than half the politicians, so no surprise there is so much resistence to regulation.

  • Moderate

    Politicians come cheap, give them a discount on their mortgages and they are your friends forever.

  • Integr8d

    Goldman wants the regulation. It puts the gov in the position of mitigating the risk of their investments. Wasn’t this in a column here? Or was it some other place?

    Goldman was Obama’s largest corporate donor.

  • valkyrie101

    “Largest Corporate donor”, now what exactly are we talking about? How much? And since the securities industry itself has been arguing, furiously, against the regulation, it is certainly a dubious notion, at best, that GS would not join them in that regard.

  • ImNotBlue

    Tommy Christopher says:
    April 26, 2010 at 1:41 pm

    Tommy… that was more or less my point. You’re entitled to you’re a liberal, and entitled to your opinion. However, those (as I pointed out, like Royal) who can’t differentiate between opinion and fact, have a problem. Believing that your above post is a “report” is not true… as I’m sure you would agree. It’s an editorial… not a straight news piece.

    it’s no secret that I’m a liberal, but I fail to see what “political ideology” you think I’m advancing here, other than honesty.

    You’re advancing your own political ideology, most closely aligned with the liberal end of the spectrum. Again, that doesn’t mean you can’t occasionally criticize your own side… only that 9 times out of 10, you’re presenting their point of view more favorably, and with an air of advocacy, towards those ideas.

    The sentence you zero in on is supported by the facts, but if you have a rebuttal, I’d be glad to hear it.

    Yes, and a similar set of “facts” could be arranged to show that Democrats shouldn’t “be within 500 yards of our economy,” couldn’t it? Just because you believe that “opinion” to be “fact,” doesn’t make it so. And that’s really the point. Some folks (like Royal) can’t quite seem to tell the difference between fact and opinion… and increasingly, that is becoming a problem.

  • http://www.sailrabbits.com Magister

    It’s nice that you wrapped everything up in a nice little ball and the blaring headline certainly draws attention, but I linked the list and made reference to this being an old story in the previous thread and several people on Gawker made comment when the Grassley leak surfaced that the SEC/Porn story was one listed in John Cook’s farewell “best of”.

    So, yeah, you’ve added some to the timeline and should be commended, but I’m not sure of the “Breaking” part of the title unless it’s there for irony or something.

  • http://www.sailrabbits.com Magister

    BTW: I first heard of this story on Wonkette, who was reporting on a Dealbreaker post and as far as I can tell everything goes back to the Washington Times

  • jackypond

    LOL Of course, the men with the billions of dollars in that industry own more than half the politicians, so no surprise there is so much resistence to regulation.
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