It’s funny how the tables turn: Before he was confirmed, Commodity Futures Trading Commission Chairman Gary Gensler faced a slew of criticism from members of Congress for being soft on derivatives regulation back in the ‘90s. Now Gensler’s golden and it’s Mary Schapiro, the chairman of the Securities and Exchange Commission, who has to deal with past demons.
Today the two agencies kicked off their first-ever set of joint meetings on regulatory harmonization. Their effort comes ahead of Congress’ anticipated contemplation of new regulations for derivatives markets, to be enforced by the SEC and the CFTC together. On the surface, things look sunny: Commissioners from the CFTC and the SEC praised the historic move toward cooperation that the hearings represent. But deep down everyone in the room knew that there were plenty of odious conflicts lurking between the two regulators, and each agency’s public image would play a part in determining how much power it could wield in the future.
So it’s a little strange, to say the least, that the SEC chose to make today the day it signed of on a scathing report by its inspector general condemning its failures in the Bernard Madoff affair. The former financier orchestrated the world’s largest Ponzi scheme, swindling $50 billion from his high-profile clients. The SEC IG’s report blames the agency’s incompetent oversight for the scandal.
What’s behind the timing of this release? There were plenty of other days Schapiro could have chosen for to give the report her stamp of approval and send it off to the Senate. Yesterday would have worked just fine, and this Friday would probably have been even better.