As the Obama Administration was ringing in its first 100 days in office in early May, the Securities and Exchange Commission’s enforcement division was awaiting a much-needed $40 million cash infusion that Congress promised was on its way.
Attempting to judge a President in a 100-day timeframe is challenging at best, though plenty of research firms, political pundits, and economists took a shot at assessing how Obama has fared so far and what challenges remain ahead for his Administration. For instance, TowerGroup analysts posited that while they still expect Obama to introduce “significant change” into the U.S. financial services regulatory structure, they predict the odds of a “truly uniform system across banking, securities, and insurance jurisdictions are extremely low.”
The Troubled Asset Relief Program (TARP), the TowerGroup analysts say, also needs fixing, because “the lack of clarity in installing a repayment plan for the TARP has strained the relationship between bankers and the U.S. Treasury.” What the Administration needs, TowerGroup says, is an “exit strategy from TARP that returns stability, risk taking, and business decision making to the banking industry.” As for the stress tests that the banks have been undergoing, TowerGroup analysts say the stress test results “may fall short of probing the overall financial strength of large financial services institutions and could mask systemic issues.” Most financial services firms, the Needham, Massachusetts, research firm says, “remain vulnerable to further severe and unexpected downturn conditions.” What’s more, the analysts argue the Obama Administration “has yet to address and fix the systemic risk issues that led to the collapse of the financial system.
Meanwhile, in the Senate
While the Administration’s performance was being dissected, the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment was busy grilling on May 7 the SEC’s new director of enforcement and former SEC officials about issues raised in a recent Government Accountability Office (GAO) report. That report concluded that there is a need to enhance communications and utilization of resources in the agency’s enforcement division. Specifically, enforcement staff complained to GAO that they had been cut off from participating in some policy decisions. Senator Jack Reed (D-Rhode Island), chairman of the subcommittee, asked the SEC’s newly christened enforcement director, Robert Khuzami, if this was so. Khuzami said that during his short time at the Commission, he has “seen nothing but shared views from the commissioners and the enforcement division.”