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Subtraction Changes Math at SEC
(Photo Illustration By Tan Ly -- The Washington Post)
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Meanwhile, Nazareth, the other Democrat on the panel, has removed her name from consideration for reappointment and told friends she would like to leave the SEC by the end of the year, adding another layer of uncertainty. Her term expired in June, but she is able to remain in her post for up to 18 months.
The prospect of having no Democratic representation at the agency in the waning months of the Bush administration, said Joel Seligman, a securities law scholar, "is exactly the way SEC governance was designed not to work."
He added: "It's deeply troublesome for the commission to go forward without bipartisan support."
"If Annette goes, it does force the hand of the administration in terms of appointing new members, because if they do anything that's controversial it could be criticized as being partisan, if they do it without a full complement of Democratic members," said Barbara Roper, director of investor protection at the Consumer Federation of America.
That concern is what might push Cox toward a more cautious or conciliatory approach. In the event of a 2 to 2 vote, officials said, any new rule-making proposal or enforcement case would stall. That is all the more important this year since the SEC is in the midst of uncovering possible malfeasance in the mortgage-lending sector and monitoring whether banks are playing down their losses on housing-related investments.
Not all observers are concerned. "Investors shouldn't worry that the agency is going to stop operating," said Richard C. Breeden, SEC chairman under President George H.W. Bush. "The basic work of processing registration statements and bringing enforcement cases, that's all done by the staff."
Washington insiders note that it is far from rare for federal agencies to operate without a full slate of leaders. The Consumer Product Safety Commission, for instance, lacks one of its members just as safety recalls for toys and other goods manufactured in China have spiked. The SEC itself tried to do its work with only two commissioners back in the 1990s.
That was before collapses at Enron and WorldCom enraged Main Street investors and refocused attention on the work of the SEC, created to restore confidence after the stock market crashed nearly 80 years ago.
