With a new president-elect in place, the U.S. has only days to wait until Barack Obama names his replacement for Treasury secretary. However, it may behoove market watchers to keep an even closer eye on who replaces Securities and Exchange Commission chairman Chris Cox, according to the Journal this morning, as securities regulation will inevitably play a significant role in the reconstruction of a strong global economy.
Though Cox’s name has long been a mainstay of the financial industry, the past year has seen his office fade out of prominence as the credit crisis has been assessed and negotiated. The dynamic duo—Treasury secretary Henry Paulson, Jr., and Federal Reserve chairman Ben Bernanke—has taken such a strong hand in the regulatory battlefield of late that Cox and the SEC have been virtually marginalized.
Critics of Cox—and of the SEC—claim that his exit from the front pages is largely due to his own unwillingness to grapple with the tough economic challenges; one infamous newspaper article describes him vacationing and attending lavish birthday parties in the midst of the Bear Stearns collapse. Cox’s main accomplishment in the last six months has been his attempts to curb short-selling within the financial community, nothing of the scope accomplished through Paulson and Bernanke’s flushing of the system.
However, whether the SEC proves to have a more prominent role in the Obama administration hinges on who Obama nominates to replace Cox. If the SEC is to continue to thrive, it will require a strong leader who can fight more for the investor and less for the direct benefit of the market.
If Obama selects a passive or weak officer to head the SEC, it very well could spell the end for the organization. Much talk has circulated in the past year of eliminating the agency or consolidating it within another; if its new chairman lies down to such an idea, expect the SEC to be finished