The Securities and Exchange Commissions stuffed up big time with Bernard Madoff, letting him get away with his fraud for some time. It failed to do its job and protect investors.

Now a Government Accountability Office (GAO) report shows us why that happened and how badly it was run under Christopher Cox. According to the report, the law enforcement lawyers were convinced SEC bureaucrats were reluctant to crack down on companies breaking the law.

"For example, when the question of whether to seek a corporate penalty is a close one, the staff will default to avoiding the penalty," the report says. "Or, if investigative staff decides to seek a penalty, they will change their focus from pursuing what they otherwise would recommend as most appropriate to tailoring recommendations to what they believe the Commission will find acceptable. According to many investigative attorneys, the penalty policies contributed to an adversarial relationship between Enforcement and the Commission, where some investigative attorneys came to see the Commission less as an ally and instead more as a barrier to bringing enforcement actions."

Enforcement attorneys said the place was slow moving and that there was a culture of risk aversion. With a rift between the enforcement attorneys and commission bureaucrats, it's easy to see how Madoff was allowed to get away with his crime.

The issue is whether others have been let off the hook that haven't yet come to light.