Bucket List of Apologies -- SEC Edition

NEW YORK (TheStreet) -- Securities and Exchange Commission Chairwoman Mary Schapiro last week did something that gave everybody within earshot a warm and fuzzy feeling: She apologized!

The subject of her apology was the SEC's former general counsel, David Becker, who was found to have been "personally and substantially" involved in the investigation of Bernie Madoff despite his financial interest in the case. A criminal investigation was recommended by the SEC's inspector general.

Well, OK, it wasn't an apology as much as it was a description of an apology, which Schapiro had made to her fellow SEC commissioners. Still, it brought to mind the immortal words of Murray Burns in the great 1960s comedy A Thousand Clowns: "That's the most you should expect from life, a really good apology for all the things you won't get."

I don't mean to single out Chairwoman Schapiro, but she and the other regulators of our financial system have a lot to apologize for -- things they should have done but didn't; things they didn't do but did. In other words, they need to apologize for all the things that the public isn't getting, which is a competent financial regulatory system.

So, in aid of future apologies, I have drafted a kind of Regulatory Atonement List. I've even suggested some wording:

"I apologize for the SEC destroying documents." The Becker conflict of interest seems to be an isolated case of stupidity. But for sheer long-term cluelessess, nothing competes with the SEC's practice of systematically destroying documents over a period of at least 17 years. It's absolutely amazing -- and inexplicable, if one does not take into consideration the SEC's history of nonfeasance -- that an investigative agency would destroy records from preliminary investigations.

The revelation of this moronic practice, first publicized by Matt Taibbi of Rolling Stone, was made by an SEC whistleblower named Darcy Flynn. "By itself, this case is reason enough to shutter the SEC and design a new agency worthy of its more than $1 billion annual budget," writes William D. Cohan in a recent Bloomberg column.

"I apologize on behalf of Arthur Levitt for sabotaging derivatives regulation." In 1998, the former SEC chairman joined with Alan Greenspan, then Treasury Secretary Robert Rubin and Lawrence Summers, his deputy, to guarantee that the markets would someday implode because of excess leverage and derivatives. Brooksley Born, chairperson of the Commodity Futures Trading Commission, sought to regulate over-the-counter derivatives, and Levitt, Greenspan and Rubin publicly denounced it.