WASHINGTON -- The Clinton administration's nominee to head the Securities and Exchange Commission on Tuesday pledged closer coordination with bank and futures regulators to avoid inefficient and duplicative oversight and to prevent panic in the financial markets.
At his Senate confirmation hearing, Arthur Levitt Jr. said he is not "overly sanguine" about regulators' ability to work together as closely as Congress would like.
But Mr. Levitt said he would set up meetings with the Federal Reserve, the Office of the Comptroller of the Currency, and the Commodities Futures Trading Commission to discuss closer cooperation in regulating financial markets.
|Clearly Is Duplication'
"There clearly is duplication in terms of regulation of our financial markets," he said. "In the best of all possible worlds, I would say that should not be."
But the former chairman of the American Stock Exchange rebuffed calls to merge the agencies into a single financial "superregulator," saying he preferred a less drastic "step-by-step" approach.
Nonetheless, he urged Congress to continue pushing regulators to work together.
"You as an overseer have got to nudge us," he said.
At the hearing, members of the Senate Banking Committee repeatedly called for a more cordial relationship among the agencies.
Sen. Christopher J. Dodd, D-Conn., called the previous administration's record of financial coordination "an abysmal failure," recalling instances of regulators' "publicly bickering with one another" at congressional hearings.
"The SEC cannot do its job in isolation," he said.
A Warm Reception
Mr. Levitt received high praise from the senators, who promised swift approval of his nomination. Sen. Donald W. Riegle, D-Mich., the committee chairman, outlined five areas of high priority for the securities regulator: reducing fragmentation within stock exchanges; competing with foreign markets; regulating derivatives; improving small business' access to capital, and overseeing mutual funds.
Mr. Levitt said he wants to inspect investment managers more closely and more frequently, and make sure mutual fund investors understand their risks. But he cautioned against requiring so much disclosure that the information becomes useless to consumers.
The nominee also pledged to scrutinize explosive growth in derivatives and to work with other regulators in overseeing it.
Maintaining |Fire Walls'
When asked about the involvement of commercial banks in the securities market, the nominee responded that their involvement so far "has been handled with reasonable discretion."
"We've adjusted to that circumstance reasonably well," Mr. Levitt said. "I don't have a problem with what I've seen so far."
He did caution, though, that the "fire walls" between banks' traditional activities and their securities business need to be "high and strong and firm."