In the wake of splashy coverage of the porn scandal at the Securities and Exchange Commission, called a political ploy by a sleuthing watchdog, Rep. Barney Frank (D-MA) told MSNBC on Friday that deregulation of banks was the real problem.

“The Republican philosophy was one that said, ‘Do not regulate. Let the market do it better,'” said Frank. “That was a conscious policy preference by the people in power, namely to defer to the market in almost every instance and under regulate.”

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As Congress battles financial reform, the SEC is already under attack for failing to curtail dirty deals by Lehman Brothers and letting Bernie Madoff’s ponzi scheme go unnoticed for years. Porn viewing among high-ranking SEC staff, however, has been public knowledge for some time.

Marian Wang at the investigative news group ProPublica wondered if it is a coincidence that Republicans opposed to financial reform “suddenly” have plenty to say “about how troubling the porn problem at the SEC is.”

Rep. Darrell Issa (R-CA) criticized what he considered a politicized SEC after commissioners voted 3-2 to sue the investment bank Goldman Sachs for defrauding investors. Just as Republicans questioned the timing of the suit, now questions are being asked about the GOP strategy of pointing to the porn issue.

“Is it a coincidence,” Wang writes, “that the SECÃ¢â‚¬â„¢s porn problem has resurfaced in the headlines after Sen. Chuck Grassley, a Republican from Iowa, specifically requested a report from the inspector general?”

Wang’s blog post today features a provocative headline, “Is the SEC porn story a new problem, or a political ploy?” Meanwhile, the AP, ABC News, CNN and other national news organizations have been driving traffic to the porn story all day.

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MSNBC’s Andrea Mitchell asked House Banking Committee Chairman Frank, “Do you think maybe we’ve just finally figured out why the SEC missed the whole Madoff thing? Where we now have an internal report that says they found some of the people at the SEC on pornography sites for thousands and thousands of hours, sometimes as much as eight hours a day?”

Frank reply in full was, “I think that is a factor, but how do people get there? The culture of the SEC, and here, you have to get political in the voter’s sense. The republican philosophy was one that said, do not regulate. Let the market do it better. We had a hearing earlier this week on the Lehman Brothers issue where the SEC was found by the bankruptcy examiner to have been clearly deficient in 2006 and 2007 and the examiner said the SEC didn’t do its job. My Republican colleagues said yeah, but we don’t need to change the regulation. That was a conscious policy preference by the people that in power, namely to defer to the market in almost every instance and to under regulate.”

This video is from MSNBC’s Andrea Mitchell Reports, broadcast April 23, 2010.