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September 20, 2012 at 10:43 AM
When you cast your ballot on Nov. 6, regulatory policy for investment advisory firms may not be at the top of your list in deciding who to vote for—or against. But make no mistake, the 2012 elections will have a profound impact on how advisory firms will be regulated and overseen in 2013 and beyond.
Viewed through this admittedly narrow prism, your vote for Obama or Romney will be the most important vote you cast. Why? Because the president has the power to appoint the people who will make the most important decisions about regulatory policies and programs that directly affect the investment advisory profession.
Topping the list is the Secretary of the U.S. Treasury Department. You may think the Treasury Department has little to do with regulating investment advisory firms. But remember that very significant financial services initiatives often come from the Treasury Department. Recent examples include Hank Paulson’s regulatory “modernization” blueprint in 2008, which called for self-regulation of investment advisory firms and “harmonization” of investment adviser and broker-dealer regulation, and Timothy Geithner’s 2009 white paper that formed the framework for what became the Dodd-Frank Act.
Remember also that the Treasury Secretary now presides over the Financial Stability Oversight Council (FSOC), created under Dodd-Frank, which has extremely broad powers to address potential risks in all segments of the financial services industry.
It is certainly possible that Secretary Geithner will leave his current post after the election (many were predicting he would leave after the debt ceiling talks in 2011). Rumors of potential successors that may be appointed by President Obama, if re-elected, include Erskine Bowles, Lawrence Fink, Daniel Tarullo, Laura Tyson, Roger Altman and Lael Brainard. Mitt Romney’s rumored potential picks include Robert Zoellick, John Taylor, Glenn Hubbard, Carly Fiorina, Rob Portman, Meg Whitman and Kevin Warsh.
The president also has the authority to nominate the chairman of the Securities and Exchange Commission. By law, the SEC has regulatory and oversight authority of investment advisory firms that manage assets of more than $100 million. As such, whoever serves as SEC chairman will have the most direct impact on policies and programs governing the investment advisory profession.
