Why the SEC Should Be Abolished, Part 2

I touched on the subject back in December.

Bob Murphy has a great piece on the SEC, here. He concludes:

The SEC clearly botched its alleged job in the case of the Madoff Ponzi scheme. Taxpayers are certainly entitled to ask, "What exactly are we getting for our (now) $900 million per year?"

It is not simply that the SEC failed to help. On the contrary, the SEC is actively harmful. For one thing, its implicit blessing of Madoff probably reassured some investors; surely the SEC would have shut him down if his returns were bogus! Beyond that, the SEC has been horrible during the financial crisis. In the summer it engaged in a phony ban on "naked" short selling that was already illegal, and then a few months later it banned short selling outright on hundreds of financial stocks, a move that paralyzed that particular sector even more. And lately, they've decided to launch a witch hunt on Mark Cuban—those 3,000+ employees have to do something...Washington politicians and bureaucrats will never put the average taxpayer or investor's interests above those of billionaire financiers. The SEC should be abolished, and investors should rely on private-sector watchdog groups to spot swindlers.

And Felix Salmon doesn't outright call for the abolition of the SEC, but what other conclusion can be drawn when he writes:

...the main lesson here [of the Madoff fraud]is highly sobering: investors simply cannot rely on regulators to protect them.