SEC's Cox: It's not my fault, either!
SEC Chairman Christopher Cox tells Congress it's time to regulate investment banks, now that there aren't any left.
Securities and Exchange Commission Chairman Christopher Cox tells Congress it's time to regulate investment banks, now that there aren't any. Highlights:
EUREKA: "The last six months have made it abundantly clear that voluntary regulation does not work."
BLAME CONGRESS: "When Congress passed the Gramm-Leach-Bliley Act, it created a significant regulatory gap by failing to give to the SEC or any agency the authority to regulate large investment bank holding companies, like Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns. (So) the Commission in 2004 created a voluntary program... in an effort to fill this regulatory gap."
YOU NEVER LISTEN: "As I have reported to the Congress multiple times in recent months, the (voluntary) program was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily..."
THE FED WILL SAVE US: "With each of the major investment banks that had been part of the CSE program being reconstituted within a bank holding company, they will all be subject to statutory supervision by the Federal Reserve. Under the Bank Holding Company Act, the Federal Reserve has robust statutory authority to impose and enforce supervisory requirements on those entities. Thus, there is not currently a regulatory gap in this area..."
WE'LL DO EVEN BETTER NEXT TIME: "We will continue to work closely with the Fed, but focused even more clearly on our statutory obligation to regulate the broker-dealer subsidiaries of the banking conglomerates."
TO THE LIFEBOATS: "It is critical that Congress ensure there are no similar major gaps in our regulatory framework. Unfortunately, as I reported to Congress this week, a massive hole remains: the approximately $60 trillion credit default swap (CDS) market, which is regulated by no agency of government. Neither the SEC nor any regulator has authority even to require minimum disclosure. I urge Congress to take swift action to address this."
Cox's whole statement here.