In this week's New Republic, Clay Risen digs into the recent shakeup at the Security and Exchange Commission. It's a hugely important issue, but kind of obscure, and media reports on the topic have often been confusing, so this is a useful piece. For instance, I've never quite heard it explained why, exactly, the former Chairman, reform-minded Bill Donaldson, resigned in the first place. Risen explains exactly how the Bush administration all but engineered his ouster. (For context, keep in mind that there are five members of the commission, usually three from the majority party and two from the minority party, and Donaldson had been siding with the two Democrats):

[I]n late 2004 came fortuitous news for the business lobby: Democratic Commissioner Harvey Goldschmid announced that he would leave the SEC over the summer to return to Columbia Law School. Goldschmid and the other Democratic commissioner, Roel Campos, had provided Donaldson the support he needed to push through a controversial series of reforms.

By law, Bush cannot replace him with a Republican, and, traditionally, the president has deferred to the opposition party when selecting minority commissioners. But, while Democrats have already put forward a replacement for Goldschmid--the SEC's head of market regulation, Annette Nazareth--Bush is not bound to accept the nomination. In fact, he doesn't have to pick anyone at all; in the past, the SEC has operated with as few as two commissioners. So, beginning a few months ago, the Chamber of Commerce and other business lobbyists began pressuring the White House to hold off on replacing Goldschmid.

Without his vote, the Commission would split 2-2 on controversial decisions, effectively halting Donaldson's reform agenda. At that point, "The president didn't have to ask Mr. Donaldson to resign," says Mark K. Braswell, a Washington lawyer and former SEC enforcement official. "If you're Donaldson, you have two choices: You change course on your agenda to avoid a 2-2 deadlock, or you walk." Not surprisingly, Donaldson chose the latter.

Very sneaky. Very sneaky indeed. You know, a couple of weeks ago I was reading Robert Caro's account of Lyndon Johnson's tenure in the Senate, and occasionally—during those moments when I forgot what a scumbag Johnson was (albeit with a few redeeming qualities)—occasionally would be awestruck by how ruthlessly Johnson could find levers of power anywhere, how he could open doors that were thought to lead only to broom-closets and find instead the dusty fusebox that controlled the whole Senate. How he singlehandedly turned mostly-useless Senate positions—like the Majority whip—into seats of concrete power. In the abstract, it was a thing of beauty. But I daresay that Bush—or Karl Rove, or whoever is hatching all these evil little schemes—has LBJ beat in that respect. It's just too bad he's a scumbag without any redeeming qualities.

Anyway, Risen also notes that the day may come when the White House wishes Donaldson were still in charge of the SEC, especially now that Chris "Randroid" Cox is going to step in and wield his burdizzo against Sarbanes-Oxley and other business regulations:

Some worry that merely the impression of a rollback [of corporate regulations] could lead to an increased incidence of fraud. "If you send the message to business that you're calling off the dogs, that it's back to the good old days, you risk seeing a resurgence of the conduct that all these regulations were adopted to address," says Barbara Roper, director of investor protection at the Consumer Federation of America. On Donaldson's watch, Bush could rest easy knowing that, when the mutual fund scandal or the American International Group investigation broke, he had Donaldson to absorb any flak--including calls for further regulation. "The fact that Donaldson had a credible regulatory reform agenda left Democrats with no effective message about the Bush presidency being weak on investor protection or corporate crime" Roper adds. "He really did insulate the administration against that criticism."

Well, that might be true. If another WorldCom or Enron erupts, say, six months from now, the blame would redound on Chris Cox' head, which means it would redound on Bush's head. When you stab the night watchman, and thieves slip into the keep, people can't help but notice that you're holding a bloody dagger. In theory. But then, Republicans managed to sidestep the corporate corruption issue during the 2002 midterms—waving the bloody bin Laden turban and all—and I'm not convinced they wouldn't be able to do it again.