More on Mary Schapiro…
I’ve just finished watching the press conference where President-Elect Obama officially named Mary Schapiro to head the SEC. Like other top appointments, Schapiro will have to be confirmed by the Senate. In her brief comments after being introduced, Schapiro described this as a “perilous time for investors who are looking to policymakers and regulators to restore trust to the financial markets.” Schapiro added that there would be an “aggressive, systemic response” that would require her to work “collaboratively and aggressively” with other regulators. She ended her brief comments by noting that “investor trust is the lifeblood of our financial markets.”
During the Q&A following the announcement, Obama was asked a question about who was to blame for the current mess and it was a pretty interesting response: everyone. “We have been asleep at the switch. Not just the regulators, but Congressional committees. The White House started with a premise that deregulation was always good.” Obama added that he planned to “greatly strengthen our regulatory apparatus” because “the American people are feeling…that there’s not a lot of adult supervision out there.” You don’t have to read between the lines to get a sense of what’s likely to come. The only question is what will the new regulations entail?
Minutes after the Schapiro announcement, outgoing Chairman Chris Cox issued this statement congratulating Schapiro.
Other people are also beginning to weigh in, including my friend Greg Newton, who as usual calls it as he sees it and this fellow blogger. Folks are also weighing in on the WaPo. So what do footnoted readers think of the Schapiro appointment?
Image credit: AP Photo by Haraz N. Ghanbari
|
Posted in Tags: Chairman, SEC |
 8 Comments » |
RSS
December 18th, 2008 at 12:22 pm
This is actually from reader Les Greenberg who writes this:
Her appointment would put the fox in charge of the hen house. As a litigator and arbitrator for more than 30 years, I have been vigorously prompting FINRA and the SEC to bring fairness to the securities arbitration process and have brought related litigation against the SEC. Both entities have resisted leveling the playing field. The Fairness in Arbitration Act 2007 (securities brokerage firms cannot require customers to arbitrate disputes before FINRA) is pending before Congress. Perhaps, the “change” that Obama promised will continue to be the same-old same-old. “Hope” is diminishing with this appointment.
December 18th, 2008 at 12:51 pm
I think she has a lot of questions to answer about Madoff. As the head of FINRA she was ultimately in charge of regulating his firm. While its true they don’t look after investment managers Madoff didn’t even register as an advisor until 2006. Most of the time he was committing that fraud it was within the broker-dealer, for which her organization was the main regulator.
December 19th, 2008 at 10:15 am
after being instantly disappointed in this particular choice, i spent a little more time reading some of her recent speeches, and became slightly more heartened. to me, one of the most dangerous and frightening financial developments in the last decade is the adulteration of the CDS market- in effect, the current CDS market is like a back room poker game worth 10x the entire corporate bond market, and whose levels of systemic risk can be seen in the AIG debacle following Lehman’s collapse. in a speech from late october, in outlining her desires for regulatory change, she specifically called out the CDS market as requiring observation and requiring a fully fledged clearing house.
in terms of the comments before mine, i think that the importance of the maddof scandal is being inflated as is the historic precedent in the media– when there is a large amount of complex systemic exploitation, the focus is drawn away from the policy decisions which create/allow a corrupt culture and is set directly onto individual and anecdotal instances. it simplifies the scope of the discussion till you have a clear bad guy, and obfuscates the larger issues.
December 19th, 2008 at 12:41 pm
@Reed: Wow you’re more ambitious than I am by going back and reading her speeches. Of course, criticizing the CDS market in late October isn’t exactly ahead of the curve thinking in my book. Now, if she had said that in October 2006 or even 2007, that would have been really impressive.
December 19th, 2008 at 1:31 pm
I’m disappointed in the appointment. Schapiro has been in charge of the regulatory body that’s primarily responsible for making sure Wall Street complies with securities laws and regulations. Its examiners live inside the broker-dealers, flagging compliance issues, reviewing capital computations, etc. Yet somehow they missed the big gaping holes that have gotten us into this mess. I’d prefer to see an SEC chair who hasn’t been part of this failed system.
That being said, at least Schapiro believes in regulation. A big improvement over Christopher Cox, no matter what.
December 19th, 2008 at 4:23 pm
I sympathize and agree with most of the comments here, but must register a caveat. Didn’t people criticize both Obama and Palin as not having enough experience in government matters? Now we see complaints about how Schapiro and others are part of past administrations, as if that is a bad thing.
How can anyone regulate an industry if s/he doesn’t know how it operates? However, that leads to the biggest systemic problem with regulatory agencies of all kinds: the foxes get to regulate their cousins: other foxes.
If an administration puts a person with NO connection to the regulated industry in charge of that industry, that person will be totally at the mercy of the un-elected, un-appointed staff.
You might be able to solve this systemic problem by appointing experienced staff people to commission seats, but haven’t staffs at regulatory agencies have been a bit lax lately?
December 21st, 2008 at 10:56 am
Uh, in light of the Madoff scandal, I agree, Shapiro is out. She is the wrong person to bring investor confidence back into the market. Madoff escaped being caught earlier only because he was too entrenched. Would Shapiro prosecuted him? Doubtful. The Senate should not be fooled.
In the meantime, Obama is starting to look like a wuss. Watch what he does, not what he says. This is a brilliant strategy on the one hand because it absolutely drives Limbaugh and Hannity insane since they live in an aural world where they want to hang you by your own words. They try that because Obama talks a good reformist game with a generous sprinkling of liberal agenda. But by his actions, there is little for the far right to crticize him for at least so far. The audacious hope for change however has not been evident in any of his appointments in the critical areas - the war and Wall St. Gates, Clinton, Geithner - these are all sops to Cerberus (the guardian of the gates of hell from greek mythology — not the private equity company).
When it comes to Wall St. Obama should be thinking more along the lines of say Ralph Nader or a pit bull dog. Hell sic Donald Rumsfeld on the SEC that’ll learn ‘em!
December 22nd, 2008 at 2:11 pm
Schapiro is a joke. “How can anyone regulate an industry if s/he doesn’t know how it operates?” That would certainly define the last 10 years of regulation by the SEC, FINRA and everyone else in the regulation business. Schapiro was involved in the Madoff review and decided to fine them $8,500. Obama is not delivering on his agenda of change with this pick. Also considering the nakedly political appointment of Richardson as Secretary of Commerce, I am very, very disappointed with Obama’s choices for cabinet. Just like a lawyer, talk a good game without any real content to back it up. The U.S. economy is going to hell in a handbasket.