Arthur Levitt, chairman of the SEC from 1993 to 2001, harshly criticized the SEC for what he considers to be its failures in recent years — failures which he believes contributed to the current financial crisis. In his testimony before the Senate Banking Committee today, Levitt stated that
“As the markets grew larger and more complex — in scope and in products offered — the commission failed to keep pace. As the markets needed more transparency, the SEC allowed opacity to reign. As an overheated market needed a strong referee to rein in dangerously risky behavior, the commission too often remained on the sidelines.”
Levitt recommended that the SEC could be improved by giving it $85 million to rebuild its staffing, by adding investor advocates to the five-member commission, and by enhancing its responsibilities to police financial markets, Reuters reports. He further testified:
“But let me be clear: a restoration of the SEC to its position from before this current slide is not enough. At this moment, we need a dramatic rethinking of our financial regulatory architecture — the biggest since the New Deal.”
Levitt’s prepared testimony can be viewed on the video below beginning at the 50:00 mark and running through 57:50.