President-elect Barack Obama met Friday with his Transition Economic Advisory Board, part of an effort to develop “a strong set of policies to respond to the economic crisis.”
Flanked by his advisers at a press conference following the meeting — his first since the election — Obama emphasized that he did not “underestimate the enormity of the task that lies ahead,” but he refused to end rampant media speculation by answering questions about new personnel appointments. To date, Obama has named only his chief of staff, Illinois Rep. Rahm Emanuel.
Many have said that the position of Treasury Secretary, in particular, should be filled quickly as the nation struggles with its worst financial crisis since the Great Depression. One of the pundits’ top picks for that position, former Federal Reserve chairman Paul Volcker, 81, stood immediately on the President-elect’s left as he spoke.
“I want to move with all deliberate haste,” said Obama. “But I want to emphasize ‘deliberate’ as well as ‘haste.’ It’s very important in all these positions, both in the economic team and the national security team, to get it right.”
Yet even as speculation continues about who will hold the top titles within an Obama Administration, the makeup of the President-elect’s advisory board provides a possible window into some specific corporate-finance issues, from the move to international financial accounting standards to the future leadership of the Securities and Exchange Commission.
For example, Obama’s board contains both a former SEC chairman, William Donaldson, and a former commissioner, Roel Campos. Although SEC commissioners, including current chairman Christopher Cox, serve for set terms, Cox has said he will step down at the end of the Bush Administration.
Donaldson, Cox’s immediate predecessor, would be an intriguing choice to once again lead the commission. The 77-year-old Republican announced his resignation in June 2005, a move many thought was forced by the Bush Administration after he proved an aggressive regulator who did not offer the relief from Section 404 of the Sarbanes-Oxley Act that some companies had hoped for. He also sought to extend the SEC’s authority over hedge funds.
This year Donaldson has been sharply critical of “pendulum pushers” — those who he says have sought to move the regulatory pendulum too far toward deregulation. And although it was under Donaldson that the SEC first proposed a roadmap for eliminating the requirement that foreign companies reconcile their financial statements to U.S. generally accepted accounting principles, he has recently been critical of the rapid movement toward adopting international financial reporting standards (IFRS) in the United States, referring to them obliquely as “vague, principles-based” financial reporting.
Choosing Donaldson, who recently called financial regulation as basic as the need for “stoplights on a highway,” would comply with Obama’s pledge to have a bipartisan administration while also signaling an intent to rigorously police the financial markets.
Another possible, and younger, pick would be Democrat Campos, who left the SEC in September 2007. Campos, the first Hispanic to serve on the commission, pushed for shareholder access to proxy statements and other positions that were unpopular with the corporate community. He was also an advocate for small business, arguing in 2006 that that smaller companies should have more time to comply with the costly internal-control provision of the Sarbanes-Oxley Act.
Campos represented the commission in dealing with international regulators and served as vice chair of the Technical Committee of the International Organization of Securities Commissions. A Campos pick for SEC chairman could suggest a continued move toward global regulation of securities markets, albeit with much stronger shareholder controls.
Former Federal Reserve chairman Volcker’s position at Obama’s left during the press conference may represent no more than the importance Volcker currently has as an adviser, and if Obama were to appoint him to any position in the Administration, it would almost certainly be Treasury Secretary. Yet most media descriptions of Volcker overlook his stint in 2000 as chair of the organization that created the modern International Accounting Standards Board. The speed of the recent move to adopt IFRS in the United States, a move championed by current SEC chairman Cox, is almost certain to come under scrutiny in an Obama Administration. Yet Volcker would likely still support the overall goal of moving to international standards, even if the timetable were to change.
Obama’s Transition Economic Advisory Board includes: