Chairman Cox’s consensus

Posted by Marc Hodak on April 21, 2007 under Collectivist instinct | Comments are off for this article

The WSJ makes hay about SEC Chairman Christopher Cox:

Instead of the split, partisan votes that had become the norm under his predecessor, Mr. Cox, a former California congressman, brought a politician’s desire to seek the broadest support possible. The commission unanimously approved rules relating to disclosure of executive pay and using technology to improve the proxy process. Under his leadership, every vote on a proposed rule has resulted in a 5-0 decision.

But now, critics are expressing frustration with this approach, arguing that because of the time Mr. Cox takes to reach a consensus the SEC is moving too slowly on important topics, leaving Wall Street and investors without guidance on key issues. The debate gets to the heart of big questions about the role of an SEC chairman: Should he push for fewer, unanimous decisions that will endure? Or should he target contentious changes, even if he alienates colleagues and interest groups?

Actually, Mr. Cox’s approach is consistent with a minimalist approach to regulation that he clearly espoused as a congressman–only adopt regulations that nearly everyone thinks are reasonable. The real reason his approach is irking his critics is that these critics are invariably special interest groups, organizations that must now work harder than just drum up support in the majority to satisfy their parochial interests. His critics like regulation, and they want more of it.

Wall Street and investors, if anything, suffer from too much “guidance.” I would guess that Chairman Cox would probably prefer to knock down a good deal of regulation, if his was the only vote that counted. Unfortunately, he’s in charge of a regulatory agency, not a deregulatory agency. This is the best one can do when one truly cares about investors as a whole.

As mentioned in the article, even Cox couldn’t do anything to stop the new “compensation lawyer full employment act” passed under the banner of enhanced executive compensation disclosure, despite my best attempt.