President-Elect Obama Assembles His Regulatory Team
Thursday, December 18, 2008SUSIE GHARIB: President-Elect Obama named two tough regulators today to police the financial markets and restore trust. He tapped Mary Schapiro, a veteran regulator as the new head of the Securities and Exchange Commission. He also named Gary Gensler, a former Treasury official, to chair the Commodities Futures Trading Commission, which regulates the futures and options markets. In the wake of the Bernie Madoff scandal and the financial crisis, Obama said he's counting on Schapiro and Gensler to overhaul the financial regulatory system. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Usually it's at least a few months into a new administration before a president nominates heads of the SEC and the CFTC. But with the SEC reeling from criticism, Obama made clear today's choices are about more than a change of management.
PRESIDENT-ELECT BARACK OBAMA: The alleged scandal at Madoff Investment Securities has reminded us yet again of how badly reform is needed when it comes to the rules and regulations that govern our markets.
DHUE: The Obama team is working on its plan to overhaul the regulatory system. The president-elect hinted at the kind of changes under consideration.
OBAMA: For us to, for example, focus narrowly on bank regulation when huge amounts of money in the financial system are sloshing around outside of banks, that's a problem. Those are systemic risks that have to be dealt with.
DHUE: He tapped Schapiro to help manage those risks because of her unique experience. She was an SEC commissioner for six years and headed the CFTC in the Clinton administration. She also oversaw the merger of the regulatory arm of the New York Stock Exchange and the National Association of Securities Dealers into what is now Finra. Schapiro is committed to reforming the system.
MARY SCHAPIRO, CHAIR-NOMINEE, SECURITIES AND EXCHANGE COMMISSION: The only way to restore the trust that has been lost is through effective, thoughtful reform of our regulatory structure and the consistent and robust enforcement of our financial regulations and this will be my top priority.
DHUE: Schapiro is credited with strengthening enforcement at the NASD. But critics note that the organization she now heads, Finra, is responsible for examining broker dealers. It too, missed the alleged Madoff Ponzi scheme. James Angel is a finance professor at Georgetown University business school. He says the problem is too many agencies with too narrow a mission.
JAMES ANGEL, FINANCE PROF., MCDONOUGH SCHOOL OF BUSINESS , GEORGETOWN UNIV.: So if you look at all the messes that have occurred in the last few years, many of them stem from things that fell between the cracks at these different agencies, so the real challenge at this point is to create a new regulatory structure that is efficient and that doesn't have so many gaps.
DHUE: Obama says regulators have been asleep at the switch and he promises his team will aggressively crack down on fraud to protect investors, consumers and the economy. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
