The Fox Wants to "Restructure" the SEC Henhouse

(MoneyWatch)  Mary Schapiro, the new chairman of the SEC, has plenty to do to invigorate her troubled agency which has been accused of doing little to prevent the financial meltdown and ignoring tips regarding the Bernie Madoff hedge fund scam.

Now the U.S. Chamber of Commerce has given her some extra homework. They have sent her a report with 23 recommendations of how to "restructure" the SEC to make it more efficient. Chief among the points is hiring a "Chief Operating Officer" to handle daily operations so she can act more like a CEO.

The report was prepared by the Chamber's Center for Capital Markets Competitiveness which says that the SEC should also create a "Coordinating Council" to make sure there's better coordination and more uniform regulation.

Let's back up a minute. There's no question that the SEC has problems but they stem from too little oversight of securities, not too much. The Chamber has been a powerful opponent of regulation of just about every stripe and pours millions of dollars into lobbying efforts to thwart regulation it considers onerous.

The "Center" that prepared the report was, in fact, created as a tool to battle the Sarbanes-Oxley Act. While flawed, SarBox has done much to improve accounting standards despite how much the business community hates it.

Former SEC Chairman Harvey Pitt and former commissioner Paul Atkins took part on a panel to conside the report and endorsed it.
Let's back up a minute again. Pitt left the SEC in 2003 after two years of service under a cloud of criticism that he was throttling efforts to tighten financial reporting standards post-Enron. Atkins, a Bush appointee, was the most strident anti-regulation commissioner during the six years he served. In fact, Atkins convinced former Chairman Christopher Cox to require that the SEC staff get the commission's permission before going after culprits or negotiating settlements. Getting rid of that dog leash was one of the first things that Schapiro did when she took office. Good for her.

To be sure, there are probably some good ideas in the report. The SEC does need to tighten up since it is too informal. It needs more market-savvy regulators rather than legions of 20- and 30-something lawyers. It needs smart folks who can figure out hedge funds which are likely to finally get the regulatory attention needed.

But considering where the recommendations are coming from, there's a certain scent in the air.