Former SEC chief says gather, share more financial data
— -- Harvey Pitt chaired the Securities and Exchange Commission from 2001 to 2003 and is now CEO of Kalorama Partners, a global business consulting firm.
USA TODAY reporter Del Jones interviewed Pitt by e-mail Thursday about the Obama administration's plans to reform the U.S. financial system and regulate hedge funds and others.
Following are edited excerpts.
Q:Treasury Secretary Tim Geithner outlined the plan in pretty broad strokes. Do you foresee a "devil in the details?"
A: He attached proposed legislation to deal with companies that pose systemic risks, so there is some detail. Notwithstanding, I am concerned that this may not give government the right tools to deal with future crises that likely would not resemble our current crisis.
Q: What would you suggest?
A: There are three urgent needs that require immediate attention.
First, the government must have a steady flow of significant data regarding all entities that operate in our financial and capital markets. The lack of data, and the trillions of dollars of decisions made in the absence of that data, is something we must correct now. Second, the government must provide a steady flow of significant data to the markets, the public and regulators so trends can be observed. Finally, we need to assign clear responsibility, authority and accountability for government to respond to any situation that may arise, authority that was and remains critically lacking. When certain circuit breakers are tripped, government would have the ability to respond.
Q: What types of consumer protections might come out of this plan?
A: We need a more rational set of protections for investors, consumers and the like. What we require is the ability to make our markets completely transparent, and to avoid the kinds of pressures that we are currently fighting.?
Q: Will Geithner's plan solve future problems, or are we just fighting the last war?
A: The proposal seems to be fighting the current, as opposed to the last, war. We need to recognize that crises are a fact of economic life and always have been. The next crisis, and there will always be a next crisis, won't necessarily look like the current one. That's the reason that we need to supply government with appropriate data, supply the markets and the public with that data, and provide broad powers to act in the event of a crisis no one was able to predict.
