Former OC Congressman and Securities and Exchange Commission Chair under the Bush administration Christopher Cox appears to be poised for a comeback campaign to Congress in CD-48.
According to Federal Election Commission filings, Cox has opened a campaign for CD-48 which is a seat currently occupied by Dana Rohrabacher.
Cox left Congress in 2005 to head up the SEC under President George W. Bush and the results were almost catastrophically awful for the nation and the world at the end of 2008. From Time Magazine:
Cox has been painted as something of a regulator missing in action — he’s still explaining why he wasn’t on particular conference calls during the Bear Stearns meltdown in March. (He told the Wall Street Journal he missed one call because the time changed, and he was involved in other calls throughout the weekend.) When he appears alongside Federal Reserve chairman Ben Bernanke and Treasury secretary Hank Paulson at press events he can seem dwarfed in stature, the representative of an agency with its roots not in sweeping monetary policy but in humble consumer protection. Created by Congress in 1934, at the height of the Great Depression, the SEC is charged with making sure that public companies accurately disclose their financials and business risks to investors, and ensuring that brokers who trade securities for clients keep investors’ interests first.
In the pro-deregulation ethos that dominated Washington over past two decades, there was little appetite for adding powers to an agency like the SEC: In 1998, when the Commodity Futures Trading Commission proposed regulating the burgeoning derivatives market, the banking lobby, with some help from hedge funds and investment banks, quickly thwarted the measure. And Cox’s predecessor at the SEC, William Donaldson, encountered stiff opposition when he tried to push more pro-shareholder measures and subject hedge funds to more oversight. When a court struck down Donaldson’s hedge fund registration rule, Cox announced that the SEC would not seek to appeal the ruling — he took the same no-appeal tact when a court shot down an SEC effort to make mutual funds appoint independent chairman. On the other hand, certain types of enforcement — like cases against companies that backdated stock options — have flourished under Cox. And now he’s a loud supporter of regulating the $58 trillion credit default swap market that helps companies insure against defaults on their debt — but also links financial institutions together in dangerously opaque ways.
Much has been made of the SEC’s failure to spot trouble brewing at the investment banks that fell under its purview. An SEC rule change in 2004 — which didn’t generate a lot of attention at the time and passed before Cox came along — let the five largest investment banks significantly raise the amount of money they could borrow. In retrospect, the new ratio — $40 dollars borrowed for each dollar of capital to back it up — was precariously high, considering smaller broker-dealers were capped at a ratio of $12 borrowed for each dollar of capital.
Should Cox have prioritized building an early warning system to detect the risk that was slowly and steadily building at these companies? Perhaps. But that wouldn’t exactly be a job the SEC is built for. “I’m not sure the SEC had the manpower or internal expertise to quickly ramp up to being able to spot highly sophisticated risk that, as far as we can tell, no one was good at spotting,” says Donald Langevoort, a law professor at Georgetown University and former SEC staffer.
Cox opened a committee on March 31, 2017 and has about $9500 cash on hand. I’d love to see Cox defend his record as SEC Chair in a public forum somehow.
There was speculation that George W. Bush was considering Cox as a possible Vice Presidential candidate in 2000 due to Cox’s strong record with former President Reagan. But Republicans didn’t think the Bumper sticker of the ticket would pass the giggle test.