Former SEC Chairman Says Dodd-Frank Adds to “Over-Bloated Bureaucracy”

The New York Times reports Harvey Pitt, SEC chairman from 2001 to 2003 under President George W. Bush, testified Tuesday before the Senate Banking Committee that the Dodd-Frank legislation does not provide the regulatory measures necessary to protect financial and capital markets.

“The act is unduly complex, adds more layers of regulatory bureaucracy to an already over-bloated bureaucracy, makes financial regulation more cumbersome and less nimble than it already was,” said Pitt, currently the chief executive of Kalorama Partners, a Washington consulting group.

He also criticized the new whistle-blower regulations and remarked that some of the rules regarding corporate control “favor certain special interests at the expense of rank-and-file shareholders.”

“In April, the Securities and Exchange Commission adopted a program that rewards employees who report crucial information about fraud and other wrongdoing,” reports the New York Times. “Under the rules, whistle-blowers are not required to report fraud internally before going to the government.”

Pitt claimed the program would deter corporate governance, internal compliance and the confidence of public investors in deeply regulated capital markets. He advocated for the SEC adding thousands of investment advisors and acknowledged the organization does not currently have the funding to execute such an initiative under Dodd-Frank.

Pitt showed some support for expanding the SEC’s jurisdiction as far as the ability to examine thousands of investment advisers. But he noted that the agency lacks the budget to fully take on the new responsibility under Dodd-Frank.


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