We've been poring over the report -- hit piece? -- on the SEC issued today by the Government Accountability Office, and we're starting to understand why Hank Paulson wanted to shut the place down and put all those "enforcers" out of their Kafkaesque misery. The agency got more tips from FINRA -- the financial industry's self-regulator -- than it had the resources to pursue, it lost 11.5% of its lawyers since 2004, and the staff lacked in-house expertise on pretty much all the fancy financial instruments without which we would not have this crisis (in addition to "government securities" which seems a bit sad, the SEC being a division of the government). The agency's revenues were in a downward spiral, with corporate penalties falling 39% in fiscal year 2006, only to fall another 48% in 2007, only to fall another 49% last year.

But as the Columbo-eseque foil for a cabal of deep-pocketed financiers with $87,000 rugs in an absurdist Office Space comedy about how the crisis happened, the SEC as depicted in the GAO report is ideal. We excerpted some of our favorite bits:

Investigators spend half their days moving boxes and waiting in line at Kinko's:

Investigative attorneys with whom we spoke concurred that having little or no administrative or paralegal support causes them to spend considerable time on non-legal duties such as copying, filing, document-scanning, preparing exhibits, making travel arrangements, soliciting bids for court reporters, and logging and processing documents submitted by respondents. For example, one attorney told us such duties can take 2 to 3 hours daily. Another, who joined the agency from private practice, said that investigative attorneys can spend up to half their time on tasks handled by support staff in their previous position. One attorney told us of plans to spend a day assembling document storage boxes. Because there is insufficient in-house copying capability, confidential documents sometimes are sent to non-secure outside copy shops. Frequent equipment breakdowns mean attorneys must search for working copiers and scanners, a number of attorneys told us.

Some attorneys estimated that they spend as much as a third to 40 percent of their time on the internal review process, thus making it harder to meet the division's emphasis on bringing cases on a timely basis. A number of attorneys told us that the effect of the intensive review process is to create a culture of risk aversion, an atmosphere of fear or insecurity, or incentives to drop cases or narrow their scope. In one instance, an attorney closed a case rather than go through a review with another division. In two other cases, charges were dropped or reduced because the matters had taken so long that people were unable to recall earlier considerations of evidence. In another situation, it took 2 1/2 months to prepare a paragraph requesting permission to send a Wells notice; in another case, staff prepared multiple drafts of a Wells memo over 3 years before finally closing the case because it was so old. Finally, one investigative attorney told us that a company under investigation offered to pay whatever penalty amount Enforcement asked; 5 months later, the matter still remained open, with an action memorandum in its tenth draft. Some attorneys noted that such delays may encourage violators.

While downloading of information from computer hard drives has become a basic evidentiary technique, some investigative attorneys told us there can be lengthy delays for information technology support staff to retrieve the contents from hard drives obtained during an investigation. For example, one attorney told us about a case in active litigation in which Enforcement had to seek an extension of time for discovery because after 6 months, only two of a number of hard drives had been downloaded.

Some investigative attorneys suggested that Enforcement would benefit from a divisionwide system for sharing information, such as litigation documents or legal analyses...

Several attorneys said that another significant shortcoming is that the investigative staff does not have access to real-time trading information...Currently, when attorneys need such information, they manually query hundreds of broker-dealers, a process that initially produces only incomplete records. Or, they might request data from a regulated entity such as FINRA.

An attorney told us that a company confessed and was willing to pay the penalty sought, but it still took more than six months to complete the settlement because the commissioners lacked consensus. Another attorney told us that a company agreed to a settlement, announced it publicly, and escrowed money for the payment, but the matter took a year to win Commission approval. One attorney cited a case that went on and off the Commission's meeting agenda eight times...Several Enforcement attorneys told us that even when they presented cases in which a corporation had agreed to pay a penalty, the Commission might lower or eliminate the amount. One attorney described a case in which a company proposed a settlement with a higher penalty than was approved by the Commission, which required the attorney to return to the company and explain that the Commission wanted a lower amount. Another described a case in which the Commission halved a proposed penalty. Yet another described having conducted the required nine-factor analysis, and arriving at a proposed penalty range of $10 million to $35 million.

As described by one attorney, investigative staff sought to identify the "maximum minimum amount" the Commission will approve.

One attorney said there has been relatively more focus on modest cases like small Ponzi schemes, insider trading, and day trading, because such cases were thought to stand a better chance of winning Commission approval, compared to more difficult and time-consuming cases like financial fraud.