SEC
Written on March 11, 2008
The U.S. Securities and Exchange Commission is unlikely to bring in new rules prompted by the subprime crisis until next year, a top official said, warning regulators should be wary of moving too far, too fast.
Commissioner Paul Atkins, speaking during a visit to London, said market and securities watchdogs should be careful not to help fuel “irrational negativism” after the “irrational exuberance” that fed the market bubble.
“I am not saying regulators should forbear enforcing the proper risk management functions where necessary, but we have to be careful not to cast doubt on good credits and cause an overreaction,” he told Reuters in an interview.
Atkins said the SEC, having learnt the lessons of overregulation in the 1990s, was keen for the market to absorb existing rules and for longer-term behavioral changes to settle before it takes fresh steps.
“Practically speaking, it is probably longer than 2008,” he said of subprime-related rulemaking.
The SEC’s review of credit rating agencies, over which it gained regulatory powers last year, is already underway and recommendations could come as early as the summer.
The SEC is charged with ensuring the agencies follow stated procedure for managing conflicts and have adequate disclosure payday loans. “What we need to do is foster competition, foster transparency,” Atkins said, but he gave no details on specific measures.
One of the latest casualties of the fallout from the credit crisis is the $330 billion U.S. auction-rate securities market — the market for long-term debt whose interest rates are reset regularly through auction — where buyers have evaporated since January, causing hundreds of auctions to fail.
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