The Plank

A Good Problem To Have At The Sec


Obama will announce his Treasury secretary nomination in the
next few days, and the safe bet is on Larry Summers or Timothy Geithner. But an
almost equally important pick will be his SEC chair. After a remarkable period
of reform under William Donaldson, the commission has languished under Chris
Cox. To his credit, Cox didn’t do as much damage as people expected--he resisted
efforts to de-regulate aggressively, at times clashing with the Commission’s free-market
fanatic, Paul Atkins. But he was way behind the curve on the key issues, and he’s
been barely relevant over the last month of turmoil.

Fortunately, if this Wall Street
Journal report
is accurate,
Obama is focusing on two great choices for SEC chair, Harvey Goldschmid and
Damon Silvers. Goldschmid teaches at Columbia Law and is a former SEC
commissioner; Silvers is an associate general counsel at the AFL-CIO and a
longtime consumer advocate. Both are experts on financial regulation, and both tilt
heavily toward investor and consumer protections. Obviously Silvers would face
opposition from business interests, but if there’s any time to get a friend of
labor in the chairman’s office, it’s now.


Whoever gets the job will face the task of rebuilding a drifting
agency in the middle of a financial storm: According to the Journal, the SEC’s corporate-finance
chief, John White, is leaving, and rumor has it others are soon to follow. But
the bigger issue is whether, in a year, there will even be an SEC, at least as
we know it. There is bipartisan agreement that the financial regulatory system needs
top-down restructuring, at the very least a merging of the SEC and the
Commodity Futures Trading Commission. But it will also mean halting the
bleeding of regulatory power to the Fed, the FDIC, and the Treasury. I
personally favor a strong SEC, which is why I back Goldschmid for the job--his
experience at the SEC makes him better able to expand his agency’s reach from
day one. But the choice between the two is a good problem to have.


--Clay Risen

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