I feel like I've been patient with the SEC's Office of Risk Assessment, but after today's Congressional testimony by Lynn Turner, former chief accountant of the SEC, I'm giving up.

OK, yes, I poked fun at the ORA when Chairman Donaldson first announced back in 2003 that the SEC was going to create a new risk management initiative that would, for the first time, devote resources to identifying new forms of fraud or illegal behavior so as to enable the SEC to "head off major problems before they occur" (I confess that I skeptically compared it back then to the Pre-Crime Unit from the movie Minority Report and called the yet-to-be hired staff "Pre-Cogs").

And, yeah, in 2004 I did sarcastically ask (after there had been not another peep about the efforts of the Pre-Crime Unit ORA for months) whether a position on the staff of ORA was "a good gig or bad gig, and whether anyone can really fault you even if you utterly fail to see over hills, stop problems before they occur or otherwise fail to foresee the future with regularity?"

Supervisor: "Carton, have you foreseen any fraud this month?"Carton: "Uh, no. No sir. I'm still thinking about it, though."Supervisor: "OK then. Keep plugging away."

And I cannot deny a certain tone of bewilderment when I wrote about the ORA a year and a half later in October 2005. I had almost forgotten about the ORA when I saw a Dow Jones article in October 2005 quoting a former SEC official who said that although the ORA had been "stuck in a holding pattern for a while," it was now "up and running" and "doing work." What kind of work? It was unclear from the article but was it really wrong of me to be unimpressed by the fact that the results of whatever work ORA was doing were reportedly being kept in a "big binder":

The risk assessment office works with others at the SEC to identify key risks to U.S. markets and investors. For now, [ORA Director] Fishkin keeps results in a big binder. He plans to replace it with a computer program that will display risks and show whether they are increasing or decreasing, offering regulators a kind of market radar.

Or that another key weapon in the ORA's arsenal was supposedly "reading"?

Reading is another weapon in the office's arsenal. Fishkin said staffers regularly plow through stacks of academic reports and stock research looking for 'red flags' in market incentives, behaviors, products or procedures.

After October 2005, ORA fell off of my radar screen again. I didn't see much about it in the press, but I assumed that the Pre-Cogs were doing their thing, looking around corners, over hills, etc. as planned. In December 2006, the SEC announced that ORA Director Charles A. Fishkin would be leaving the Commission early in 2007 to take a position with asset manager AllianceBernstein. The SEC sent Fishkin out in style, trumpeting in a press release that

"Charles has had an enormous impact preparing the agency to meet tomorrow's challenges," said SEC Chairman Christopher Cox. "The risk program he and his office created will have a lasting effect on the SEC's ability to protect investors, maintain orderly markets, and promote capital formation. Starting a new program within a major federal agency is hugely challenging, but Charles successfully met that challenge through his abilities as an innovator and leader. With Charles's work as our foundation, the Office of Risk Assessment and our risk management program will continue to play a critical role in the success of the Commission's mission."

The SEC went strangely silent about ORA in 2007, however. A search of the SEC's website fails to find even a single public mention of ORA in 2007. Finally, at the end of February 2008, the SEC issued a press release stating that, more than a year after Fiskin's departure, Jonathan Sokobin, had been hired to replace Fishkin as ORA director. The SEC stated that "this year, under Jonathan's leadership, the Office of Risk Assessment will see a doubling of its professional staff to provide resources and analytical support" to the SEC's various divisions.

All of which leads me back to the reason for this lengthy post and why my patience with the ORA has now worn out. Today, Lynn Turner testified before the House of Representatives Committee on Oversight and Government Reform. He stated that he believes that some of the blame for the current financial crisis is due to regulation failing to keep pace, and that "at the Securities and Exchange Commission ("SEC"), the Office of Risk management had been reduced to an office of one by February of this year."

Wait — an office of one in February 2008? One?! I won't even get into whether this means that the addition of Mr. Sokobin in February 2008 gave ORA its "one" or whether he joined another "one" who was already there (I'm assuming its the latter). Either way, to me this means that the "enormous impact" and "lasting effect" of Fishkin and the "critical role" ORA was to continue playing following his departure either never existed or was allowed to completely die on the vine in 2007. As Mr. Turner stated in response to questions during his testimony, "when that [one] person would go home at night he could turn the lights out." He added that as excellent as the SEC staff typically is, "when you cut it down to one, you know what you're doing, you know you're basically saying we're not going to do the job."

So that's it for me and the ORA. We're finished. Oh, and one more thing: I'm no longer impressed whatsoever with the stated goal of ORA "doubling its professional staff" this year!