SEC Chairman Christopher Cox plans regulation that would bring the SEC and Commodity Futures Trading Commission under one roof before he leaves office in January.
In a speech before the Practicing Law Institute in New York, Cox said that consolidation of the SEC and CFTC would protect all areas of the markets, and prevent the missteps that caused this market crisis.
After the speech, Cox talked to IFLR and explained his desire for immediate action.
“The top priorities for me over the next couple of months concern the current credit market crisis,” he said walking through the hotel lobby. “For example, we will have final action before Congress that won’t allow dual credit agencies.”
In a follow-up answer, Cox said that he wants to pass regulation to create one credit-regulatory agency before he steps down, which is expected sometime around the inauguration of US President-elect Barack Obama.
The task would be impossible, as only Congress has authority to create such a group and it was unlikely to reconvene until after January.
But recent discussion over the bail out of the automobile industry could force Congress back into session before January, and US House Speaker Nancy Pelosi has said regulatory merger is on her agenda for the session.
Still, such a big move would be hard to push through before Obama takes office. “Merging the regulators has been in discussion and it has support, but I doubt he will be able to do it,” said Thacher Proffitt & Wood partner Christopher Lewis. “He will want that as part of his legacy, but I think it will have to happen after the inauguration.”
A consolidation of the two agencies into a group Cox calls the Select Committee on Financial Services Regulatory Reform would mean a single credit-rating regulator that could eliminate argument among the two groups about jurisdiction on credit default swaps, and make regulation of swaps a more realistic goal.
Cox called for stronger and more effective regulation that avoids “major holes and gaps,” such as the swaps market.
Cox’s call for immediate regulatory consolidation contrasts with a speech made by CFTC Chairman Walter Lukken on Tuesday morning. Lukken called for three regulating committees that would disperse SEC and CFTC and “the various banking regulators” responsibilities among three regulatory committees.
Cox’ view holds more sway in Congress than Lukken however, and the combination of the two groups would be more likely than Lukken’s plan. A Select Committee would be more of an acquisition by the SEC than a merge between the two groups.