Heads Up on Cox
We should all be interested in how SEC Chair Christopher Cox is responding to the Congressional mandate to review the misguided experiment of FAS 157 — the determination to use the worst possible price of any thinly-traded asset to destroy the balance sheet of any financial institution with a similar holding.
Congress gave the SEC ninety days, and the independent regulatory agency is taking the maximum time, reporting on January 2nd. Today's speech by Cox, in front of an accounting group, may give some hint of the study findings.
The Wall Street Journal says not to expect anything significant.
The President cannot fire the SEC Chair or any member. Terms for the five members expire each year in June on a staggered basis. The partisan split must be kept at 3:2, with the President naming the Chair. Cox has stated that he will resign when a new President takes office, perhaps waiting for a replacement to be named.
Let us hope that the President-elect has a candidate in mind.
There is a reasonable solution to the question of complex assets — providing both visibility and more realistic valuation. If and when this problem is fixed, it will be the single most bullish event for US equities, ending the death spiral where assets are destroyed faster than TARP money can be added.