Arthur Levitt, who was Chairman of the SEC from 1993 to 2001, has an editorial in today’s WSJ calling for the SEC and the Commodity Futures Trading Commission (CFTC) to merge into one super-regulator that he dubs the “Securities Futures Commission.”
Levitt writes that
This newly empowered agency — call it the Securities Futures Commission (SFC) — would supervise markets (OTC, exchanges, boards-of-trade and municipal debt), broker-dealers, commodities merchants, investment banks (as boutique firms arise to fill the current void), accounting standards, rating agencies, mutual funds, hedge funds, corporate reporting, and the clearance and settlement systems.
This new agency should be given an old mission with new powers. The SFC’s mission should be investor protection, built upon tough enforcement and ensuring efficient financial markets. Its new powers should include enhanced authority over hedge funds, OTC products and rating agencies. For investment banks, the SFC should supervise their global business lines and be able to establish appropriate capital standards.
This new agency also should be self-financing — to be able to fund the types of programs and hire the talent necessary to keep up with the rapidly changing financial marketplace.
He further suggests that the chairman of the SFC, like the chairman of the Federal Reserve, should be appointed for seven years, without regard to political party.
Levitt believes that his proposal is quite different from the one proposed by Treasury Secretary Henry Paulson last year, which he feels would gut both the SEC and the CFTC and place them under the thumb of the Federal Reserve and the Treasury.