The Inside Story on the Breakdown at the SEC

The Securities and Exchange Commission was created during the Depression to bolster confidence in financial markets and root out fraud. But under former chairman Christopher Cox, the agency was less than aggressive

Illustration by Sean McCabe for TIME; Getty (4); AP; Reuters

Historians looking for an early sign that the worst financial crisis since the Great Depression might be deeper than expected could do worse than listen in on a predawn teleconference one Friday last spring. Top Treasury and Federal Reserve Bank officials hunched over their phones in a last-ditch bid to bail out the giant investment bank Bear Stearns Cos. But a crucial voice was missing from the emergency conference call: Christopher Cox, chairman of the Securities and Exchange Commission.

And it was not the only time the nation's chief securities regulator was absent during that critical weekend. On Saturday, as bailout...

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