By Emmanuel Olaoye
WASHINGTON/NEW YORK (Thomson Reuters Accelus) - With the U.S. Congress still politically divided after the elections that returned President Barack Obama to office, the U.S. Securities and Exchange Commission is likely to take an enforcement approach to supervision rather than look to change conduct by writing new rules, former commission chair Harvey Pitt said.
A divided Congress, he said, would struggle to check an SEC that turned to enforcement actions to implement policies it saw as in keeping with the Dodd-Frank Act.
“If you’ve got a split Congress, effectively it means that Congress’s principal weapon (against a regulator) will be holding hearings … That is a lot less of a potent weapon than the notions that if Congress doesn’t like what you do, they may pass a law that curtails your ability to do what you’ve been doing.”
“In essence it enables a determined and aggressive regulator to basically move and not potentially fear being holed up by Congressional political actions. I think that’s how it will play out,” said Pitt, who heads Washington based consultancy Kalorama Partners.
Obama’s re-election was a boon to supporters of Dodd-Frank who want Wall Street firms to face tougher rules on risk taking, lending and consumer protection. Mitt Romney, his Republican opponent, had said he would repeal the ground breaking law if he was elected as president.