UPDATE: SEC's Cox Urges `Exit Strategy' For US Emergency Aid
Friday December 5th, 2008 / 0h01
(Updates with details of meeting with Obama transition team) By Judith Burns Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Securities and Exchange Commission Chairman Christopher Cox thinks federal officials need to have two words in mind as they continue to plow unprecedented amounts of federal money into private firms: exit strategy. In a speech to a housing and finance group here Thursday, Cox raised concerns about extended federal interventions to bail out financial firms at a cost that already exceeds $6 trillion. Cox warned against a prolonged U.S. ownership of firms that are government regulated, calling for federal investments in such firms to be temporary and come with a clear expiration date. Future divestments of U.S. holdings in private firms should be done in a predictable fashion to avoid surprising markets, he added. Cox suggested that constructing an exit strategy for U.S. holdings of Fannie Mae (FNM) and Freddie Mac (FRE) could be particularly tricky, and said the federal housing-finance giants shouldn't be forced into unsound business practices that would make it harder for them to return to profitability. Asked about a congressionally-ordered SEC study of fair-value or "mark-to-market" accounting, due early next year, Cox said the SEC is "very far along," and he promised to provide interim findings in a speech Monday to a meeting of the American Institute of Certified Public Accountants. In a related vein, Cox said the SEC is working with the Financial Accounting Standards Board on guidance to help companies implement fair-value accounting as they prepare year-end financial reports. He didn't provide details. The SEC chief defended the agency and said that as policy makers consider regulatory reforms, "I would double down on all of the things the SEC is very good at," including enforcement. He reiterated his support for merging the SEC with the Commodity Futures Trading Commission, provided the SEC's traditional strengths and approaches aren't diluted. Cox said he's already met with President-elect Barack Obama's transition team, but declined the opportunity to say publicly what advice he'd have for his successor. On swaps and derivatives, Cox urged Congress to consider legislation to regulate over-the-counter swaps and derivatives, and said that in the meantime, regulators are working with market participants to create central clearing facilities that will shed more light on previously opaque trading. "Disclosure and sunlight are very important here and I think we need to provide it," Cox said. Cox isn't in favor of new laws targeting credit rating agencies, telling the audience: "I do not think that new legislation is needed." He noted that Congress gave the SEC authority to regulate rating firms in 2006 and that the SEC is using that authority, including by adopting new rules this week intended to increase competition and accountability in the ratings industry. -By Judith Burns, Dow Jones Newswires, 202-862-6692; Judith.Burns@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=G8rN%2BJs%2FXaaSgxy4%2FPCYtg%3D%3D. You can use this link on the day this article is published and the following day.
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