CHRIS Cox for VP?
Former conservative colleagues in the House of Representatives are Christopher Cox, chairman of the Securities and Exchange Commission since 2005, boosting to be Sen. John McCain’s vice presidential running mate.
ROBERT D. NOVAK – Syndicated Columnist, March 18, 2008
Republican presidential candidate John McCain, in remarks prepared for delivery Thursday, said he thought Christopher Cox, chairman of the Securities and Exchange Commission, should be dismissed.
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In a speech in Cedar Rapids, Iowa, Sen. McCain said the SEC allowed abusive short-selling, or bearish bets on a company’s stock, to turn "our markets into a casino."
McCain Says Cox Should Be Fired As SEC Chief Amid ‘Casino’ Markets
McCain is right that Cox should be fired. (Still unlike McCain assumes, Cox can not be simply fired on a Presidents say so.) But Cox should certainly not be fired for allowing short selling.
If you allow people to act on expected increases of a products price, like filling up the car before a Gulf hurricane hits because gas will likely be more expensive the next day, why not allow people to act on an expected decrease of a product’s price? Why should there be an asymmetry between up- and downside risk?
This is the real reason why Cox should be fired:
The events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
Instead, the 2004 exemption — given only to 5 firms — allowed them to lever up 30 and even 40 to 1.
Who were the five that received this special exemption? You won’t be surprised to learn that they were Goldman,
Merrill,Lehman,Bear Stearns, and Morgan Stanley.
Blaming short sellers is in vogue these days. But financial markets did not go down because of short sellers. They did and do go down because rampant fraud allowed after zealous deregulation. Something McCain and Cox both have favored and are still favoring.