Former SEC Member Blames Regulatory Gaps And Overlaps

Harvey Goldschmid, a former commissioner of the Securities and Exchange Commission, today declared that the financial crisis unfolded in part because large sections of the industry were unregulated, while other parts were simply badly regulated, typically by overlapping agencies.

 
Goldschmid, who is co-chair of the Financial Crisis Advisory Group and Dwight Professor of Law at Columbia Law School and who was an SEC commissioner between 2002 and 2005, stated in a presentation to EuroFinance that, “Hedge funds, private equity and derivative products – all were not being covered in the United States by any realistic oversight, and that’s unwise.” Moreover, he added, “the way we were overseeing the private sector left a lot to be desired: the Office of Thrift Supervision (OTS) was a very weak agency, and yet it had some key banks that went under – Washington Mutual, among others.” Goldschmid predicted further consolidation of bank regulators in the wake of the Obama administration’s proposals to merge OTS with the Office of the Comptroller of the Currency (OCC).
 
Goldschmid offered these words in anticipation of next week’s 18th International Cash and Treasury Management conference in Copenhagen, “They are living in interesting times – without it necessarily being a Chinese curse. It’s a dynamic period and they’re just going to have to keep up.”