SEC Chairman Cox resigns

Wait one second?  It is a new administration, aren’t the people from the previous administration supposed to resign?

With cabinet agencies, yes, with independant administrative agencies like the SEC, no. While commissioners of the Securities and Exchange Commission are appointed by the President, they do not serve “at the pleasure of the President”.  The SEC consists of five commissioners appointed by the President to five year terms.  The terms are staggered so that one commissioner is appointed every year.  It is rare, however, for a commissioner to serve a full five year term on the commission. To maintain the independance of the agency, no more than three commissioners may be of the same political party.  Cox’s resignation does make room for President Obama to appoint a new chairman to finish Cox’s term.

What will Cox’s legacy be?

Undoubtedly not a good one.  His chairmanship oversaw the largest economic collapse since after World War II.  The SEC failed to see the signs of the banking crisis that errupted late last year, they also have been accused of having lax oversite in other areas.   The prime example of lack of oversite is SEC’s inability to uncover Bernie Madoff scandal, especially given the size and scope of the damage from the scandal.   In more conservative circles he will also be vilified as an ardent defender  and enforcer of Sarbanes-Oxley, a law which is often criticized as being drawn and past in the face of the Enron collapse, as ineffective in its enforcement, and as too burdensome on law abiding businesses.

The new SEC chairman.

President Obama has designated Mary Shapiro as his choice to fill in the SEC chair position.  She will be the first woman appointed to chair the SEC.  She has a long history of working with the SEC, having been appointed to a term as a commissioner in 1988 by President Reagan, and as acting chairman by President Clinton in 1994.  Undoubtedly she will have a lot of work to do in trying to fix an agency that has been under heavy scrutiny for almost a decade.