"Voluntary Regulation Does Not Work" - Christopher Cox
From The New York Times.
“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement.
The program “was fundamentally flawed from the beginning, because
investment banks could opt in or out of supervision voluntarily. The
fact that investment bank holding companies could withdraw from this
voluntary supervision at their discretion diminished the perceived
mandate” of the program, and “weakened its effectiveness,” he added. ...
The program Mr. Cox abolished was unanimously approved in 2004 by the commission under his predecessor, William H. Donaldson. Known by the clumsy title of “consolidated supervised entities,” the program allowed the S.E.C. to monitor the parent companies of major Wall Street firms, even though technically the agency had authority over only the firms’ brokerage firm components.
The commission created the program after heavy lobbying for the plan from all five big investment banks. At the time, Mr. Paulson was the head of Goldman Sachs. [emphasis added] He left two years later to become the Treasury secretary and has been the architect of the administration’s bailout plan.
Via The Big Picture.
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