Senate Committee Questions SEC Nominees (with Delta Strategy Group Summary)

Notwithstanding Senator Warren's preference for a monolithic regulator (such as the Consumer Financial Protection Bureau), the Securities Exchange Act provides that members of more than one party must serve as Commissioners of the SEC. This reflects some level of tolerance on the part of Congress for a diversity of regulatory views. Senator Warren's attack on Ms. Peirce reflects the Senator's unhappiness about the possible confirmation of a policy-oriented intellectual who has asserted her active disagreement with the Senator. If Congress wants knowledgeable persons to become financial regulators, then it must understand that those persons will have opinions, some of which may diverge from those of individual senators, and some of which may challenge the law as it now stands. Those persons might even believe that the law may be changed for the better. Nominee Peirce rightly observed that the fact that one disagrees with the law does not eliminate one's obligation to comply with it.

It was notable that Senator Warren described the job of the SEC as being that of primarily a watchdog. Actually, the primary role of the SEC is devising rules that benefit the economy, including through rulemaking (and non-rulemaking, and other actions) that facilitate the issuance of capital and the workings of the markets. Senator Warren's description of the SEC suggests that there is a permanent antagonism between the government and the market system. This ought not to be the case, even if part of the government's role is policing the market system.