Wednesday, 27 June 2007 01:06
The SEC’s 5 Commissioners answered questions in front of the House Financial Services Committee today on a range of issues. Committee Chairman Barney Frank instigated the historic hearing which represents the first time that all 5 Commissioners have been called to testify in at least 10 years.
The call comes amidst a growing concern in Congress over Wall Street, fueled by the ongoing Bear Stearns bailout and the Amaranth Advisors failure of last year. The house has been considering a bill to revise tax treatment of private equity funds, as well, following the recent Blackstone IPO.
SEC Chairman Christopher Cox maintained a cool demeanor through a marathon questioning session that covered mutual fund disclosures, Sarbanes-Oxley, elimination of quarterly earning statements, scheme liability, and hedge funds.
Many analysts following the situation expect that the now Democrat controlled Congress will try to push back some of the corporate-friendly policy created during the Bush administration in favor of more populist legislation.
Such a tone was emphasized toward the end of the hearing when Rep. Emanuel Cleaver (D-MO) called hedge fund fee structures obscene and asked about a potential blow-up caused by Bear Stearns ties to the subprime mortgage market. Chairman Cox responded that he saw little systemic risk flowing from the Bear Stearns problems and assured the Committee that the SEC would continue monitoring the situation closely.
Chairman Frank apologized to the press for the lack of fireworks produced by the testimony but applauded the SEC Commissioners for an enlightened discussion which would give the Committee much to consider in the coming months.