SEC's Donaldson Known as Strong Advocate for Reform
RENEE MONTAGNE, host:
President Bush has nominated Republican Congressman Christopher Cox of California to head the Securities and Exchange Commission. He will replace William Donaldson who has announced his resignation. Donaldson came to the SEC in 2003, as NPR's Jim Zarroli reports.
JIM ZARROLI reporting:
Donaldson made the announcement that he was leaving yesterday, one day before his 74th birthday, saying he wanted to return to the private sector and spend more time with his family. At an afternoon press conference, he told reporters that after an eventful two and a half years, it was time to let someone else handle the job.
Mr. WILLIAM DONALDSON (Securities and Exchange Commission): As I tried to say to the president, `It's been a really interesting and productive period.' I think that we have made great progress and I'm totally dedicated and appreciative of the work that the team has done.
ZARROLI: Donaldson is credited with restoring morale at the SEC after the departure of former Chairman Harvey Pitt who was often seen as an abrasive manager. Donaldson came to the commission at a time when investor confidence had been badly shaken by the corporate scandals at companies such as Enron and WorldCom. Charles Elson, who heads the Weinberg Center for Corporate Governance at the University of Delaware, says that when Donaldson was appointed, few people expected the kind of aggressive reformer he turned out to be.
Mr. CHARLES ELSON (University of Delaware): His reforms in the board composition, his reforms in the regulation of mutual funds, his reforms in the regulation of the exchanges themselves have brought dramatic impact and I don't think the financial world will look quite the same following his tenure.
ZARROLI: Elson said one reason Donaldson succeeded in pushing through so many reforms was his establishment position. Before coming to the SEC, he headed an investment bank, served as chairman of the New York Stock Exchange and went on to head the insurance giant Aetna.
Mr. ELSON: It made the changes that he wrought much easier for people to accept because this wasn't someone who came from a far-out position and advocated change. This came from someone who was clearly part of the old establishment advocating change which suggested that the change was necessary to preserve the system.
ZARROLI: But many of Donaldson's positions made him less than popular with business leaders. He was a big supporter of the Sarbanes-Oxley Act of 2002. The act imposed a strict new set of regulations on the way publicly traded companies are audited and managed. Many business leaders have complained that its provisions have been onerous and expensive and they've pressured the SEC to water down the regulations.
The US Chamber of Commerce is suing the SEC over the way it regulates the mutual fund industry. Another group, The Business Roundtable, issued a statement yesterday calling on the White House to appoint someone as SEC chairman who would strike the right balance so that companies can continue to grow and create jobs.
At yesterday's press conference, Donaldson denied that the opposition he's encountered played a part in his decision to leave.
Mr. DONALDSON: I believe that when you're elected to the Securities and Exchange Commission or chosen for it and when you become chairman, I think you leave the politics at the door. On each and every issue, I've had one thought in mind and that is: Is this in the public interest and is it in the investor interest?
ZARROLI: The man chosen by the White House to replace Donaldson is California Congressman Christopher Cox. He now heads the House Committee on Homeland Security. He's also maintained close ties to business groups and has been a strong proponent of cutting the estate tax and capital gains tax. His appointment has to be approved by the Senate.
Jim Zarroli, NPR News.
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