In a lengthy interview with the Washington Post, his first interview since the Madoff scandal broke, SEC Chairman Christopher Cox, defended his leadership and restraint during the financial crisis. Cox also clarified that although it was not well understood by the public, it was not the SEC’s job to prevent investment banks from collapsing, but rather to shelter their securities trading units from problems in the broader corporation. “The SEC is not a safety and soundness regulator,” he said
Although Congress and many others have criticized the SEC’s passivity in the face of the financial crisis, Cox stated that, to the contrary, the SEC’s “calmness” has been a “signal achievement:”
“What we have done in this current turmoil is stay calm, which has been our greatest contribution — not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants,” Cox said. This caution, he added, “has really been a signal achievement for the SEC.”
Cox distinguished the SEC’s calm response to that of other regulators such as the Treasury and Federal Reserve, stating that “When these gale-force winds hit our markets, there were panicked cries to change any and every rule of the marketplace: ‘Let’s try this. Let’s try that.’ What was needed was a steady hand.”
Speaking about the SEC’s admitted failures in the Madoff case, Cox said
the SEC’s emphasis on enforcement is as strong as ever. “We’ve done everything we can during the last several years in the agency to make sure that people understand there’s a strong market cop on the beat,” he said.
“That’s why Madoff is such a big asterisk,” he added. “The case is very troubling for that reason. It’s what the SEC’s good at. And it’s inexplicable.”
Chris Cox is a consummate professional and would never knowingly allow his agency to fall subject to such allegations.