Friday, May 9, 2008
SEC Chair Cox's response to the Bear Stearns collapse -- and perhaps to the Treasury Dept's Blueprint that calls for a diminishment of the SEC's role -- is to call for greater agency oversight over the four remaining "consolidated supervised entities" -- Morgan Stanley, Goldman Sachs, Lehman and Merrill Lynch --- those giant financial firms that do not have a bank that subjects them to Federal Reserve supervision. In recent speeches Cox has called for more disclosure about capital and liquidity and a reduction of short-term financing. Todays Wall St. Journal's Heard on the Street column questions whether additional disclosure about capital and liquidity would be useful to investors. Reducing firms' leverage might be useful, although Wall St. will complain that the SEC is turning "pit bulls into poodles." That might be a good thing. WSJ, The SEC's Show of Force.