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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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May 12, 2008 12:01 AM ET
Bloomberg
SEC CHANGE? Paul Atkins' seat is slated to be occupied by a more pragmatic conservative.
The SEC will soon bolster the requirements of the so-called consolidated supervised entity program (CSE), which oversees the five largest investment banks, to require greater disclosure of capital and liquidity levels and credit exposures. But enforcement funding levels in the latest appropriations request have flattened. For fiscal year 2009, the agency sought $913 million, less than 1% more than what was budgeted last year and a decrease from 2005 funding levels. A roughly 10% decline in staffing over the past year has some concerned that SEC funding is inadequate. Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, has called for $30 million more for the SEC’s budget, while Sen. Jack Reed (D-R.I.) wants $40 million more for both the CSE program and greater enforcement. The SEC plans to nearly double CSE staffing from 25 professionals to 40, and wants a dedicated stream of funding for the program. Yet SEC chairman Christopher Cox has testified that enforcement staffing and funding are adequate at current levels. Meanwhile, Treasury Secretary Henry Paulson’s proposal to overhaul financial regulation envisions turning over investment banking oversight to the Federal Reserve. But that idea has run into some opposition. Among such critics is former SEC chairman Arthur Levitt, who testified before a Senate subcommittee last week in favor of increasing the SEC’s funding for enforcement. Mr. Levitt said a “sharp decrease” in the SEC’s enforcement budget has led to a reduction in corporate penalties over the past year. “Right now, I fear that the SEC does not have what it needs to meet the demands of the day,” he said, noting that the SEC’s power comes from strong enforcement actions, not from the prudential regulation of banks, for which Treasury Secretary Henry Paulson has called. Joining this criticism was David Ruder, SEC chairman under Ronald Reagan, who also testified last week that the SEC’s enforcement program is vital to its mission, and that Congress should look carefully at the SEC’s budget to see if some “dramatic increase” is warranted. “In the 1990s, the SEC budget was truly starved,” said John Coffee, a law professor at Columbia University. But while it received a major boost after the Enron and WorldCom scandals, he added, the enforcement program has since been put back on a diet, starting with the SEC’s policy in 2004 to focus more on individual penalties rather than “penalizing” shareholders with large corporate penalties. That policy was largely the brainchild of Mr. Atkins, who announced his resignation last Monday. In addition, the SEC still has a pilot program in place in which enforcement staffers must pre-clear settlements with a full commission vote before approaching companies, a practice also pushed by Mr. Atkins that some say has been a drag on the process and led to lower settlement amounts. Enforcement at the SEC spiked after 2001 upon Enron’s collapse, and reached a peak of 679 cases in 2003. The following year, enforcement cases started dropping, and by 2006 they were at pre-2002 levels, with only 574 cases filed. Last year, enforcement cases rose to 656. 
Bloomberg
XBRL ENTHUSIAST SEC chairman Christopher Cox has argued that the agency's current funding and enforcement staffing are adequate.
However, with Mr. Atkins leaving the SEC, and three new commissioners coming in, a shift in approach could soon be in the works, which has observers paying close attention to the three nominees slated to fill those seats. Mr. Cox is widely expected to leave the commission when his term is up next June, or be replaced before then by whoever wins the White House in November. The Bush administration’s nominee to take the place of Mr. Atkins is Troy Parades, a law professor at Washington University. While relatively unknown except in academic circles, Mr. Parades brings a host of literature showing that he’d likely follow in the model of Mr. Atkins, though perhaps not as forcefully. In several academic papers and blog postings, he’s come out against regulation capping executive pay and registering hedge funds for SEC oversight, and has been an ardent cheerleader for XBRL, the interactive data-tagging project pushed by Mr. Cox. In his writings, Mr. Parades has argued that executives and board members should focus less on regulatory compliance and more on strategy, and that too much securities disclosure could distract investors. Mr. Parades is being viewed warily by unions and investor advocates, while some Wall Street groups have lauded his nomination. The Financial Services Roundtable said that Mr. Parades had “very large shoes to fill” in replacing Mr. Atkins, but that he is “ideal for the job.” Overall, however, he is not considered as strident a conservative as Mr. Atkins is. Two Democrats have also been appointed to fill vacant seats at the SEC. Luis Aguilar, a partner at McKenna Long & Aldridge, and Elisse Walter, senior executive vice president of the Financial Industry Regulatory Authority. The Senate has not yet set a date for confirmation hearings for any of the nominees. FW
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