California lawmaker to replace SEC chairman

David Espo

Thursday, June 2, 2005 | 9:41 a.m.

WASHINGTON -- Acting quickly, President Bush named conservative Rep. Christopher Cox to lead the Securities and Exchange Commission today. Cox would succeed William Donaldson, who announced the day before he was stepping down after 28 months.

With Cox at his side at a White House ceremony, Bush said the Californian is "a champion of the free enterprise system in Congress. ... He'll be an outstanding leader of the SEC."

Cox, 52, a member of the House Republican leadership, has a wide-ranging background, from foreign policy and economic issues to homeland security. He has represented California in Congress for 16 years. Before that, he was a corporate finance lawyer in private practice and served as a senior counsel in the Reagan White House.

Bush also had kind words for Donaldson, a former Wall Street official whom the president picked to restore investor confidence after a wave of corporate scandals. Donaldson "has done an exceptional job," Bush said, noting that he "took this post as our economy was faced with a crisis in investment."

Bush said Cox was "the right man to carry on this job."

Donaldson's aggressive regulation antagonized some business leaders and their allies in the administration and on Capitol Hill. Still, Bush said that Cox would continue to press for forceful regulation.

"I've given Chris a clear mission: to continue to strengthen the public trust in our markets so the American economy can continue to grow and create jobs," Bush said.

He called on the Senate to confirm Cox "at the earliest possible date."

For his part, Cox said he was "deeply honored" by Bush's faith in him.

The laws enforced by the SEC have given the United States "the most dynamic and vibrant capital markets in the world," Cox said. He vowed to stand up for "clear and consistently enforced rules" if confirmed by the Senate.

Cox, who is the chairman of the Homeland Security Committee and a veteran of the Financial Services Committee in the House, praised Donaldson, and said he would try to live up to the high standards he set. He called the SEC "one of the best-run agencies in the federal government. And it has been so for years."

Cox said he had been "consistently impressed by the high caliber of professionals who regulate corporate finance and our markets. It will be an honor, if confirmed, to join this exceptional team."

Cox appeared in the Roosevelt Room ceremony with his wife, Rebecca, and two sons and a daughter.

"As a champion of the free enterprise system in Congress, Chris Cox knows that a free economy is built on trust. In the years ahead, Chris will vigorously enforce the rules and laws that guarantee honesty and transparency in our markets and corporate boardrooms," Bush said.

Noting that the United States was "increasingly a nation of stockholders," the president said: "Now more than ever we must make sure Americans can rely upon the integrity of our markets."

The SEC position is subject to Senate confirmation, a process that left Cox bruised once before. He was in line for an appointment to the U.S. Court of Appeals in 2001 when Democrats suddenly gained control of the Senate.

Facing opposition from at least one of his home state's two Democratic senators, Cox realized he faced a difficult fight to win confirmation to the bench without a guarantee of success. He withdrew his name. The holder of a business and a law degree, he has voted for legislation to make it easier for companies to defend against securities fraud lawsuits.

Cox supported the Sarbanes-Oxley Act of 2002, Congress' response to financial scandals at Enron Corp., WorldCom Inc. and other large companies. The law ordered the most far-reaching changes in corporate accountability since the Depression, imposing stiff new rules on companies and their top executives.

He also is a longtime advocate of repealing taxes on capital gains as well as on dividends.

In his announcement, Donaldson cited family reasons and denied he was stepping down because of disagreements with Republicans over commission decisions. He had sided with the two Democrats on the five-member panel on rules in such areas as stock market trading, hedge funds and mutual funds.

Donaldson, just shy of his 74th birthday, said he hoped "there will be no legalistic rollback of any of these key items." He predicted the next chairman "will leave politics at the door."

Bush turned to Donaldson, a Republican and family friend, in 2003 to replace the embattled Harvey Pitt, whom administration officials forced out after a series of political missteps.

The White House likely will have two additional vacancies to fill on the commission.

The term of one Democratic commissioner, Roel A. Campos, expires this year. Democrat Harvey Goldschmid has made it known that he intends to return to teaching at Columbia University this fall.

By law, no party may control more than three seats on the five-member panel.

Senate Democrats have suggested that the president nominate the SEC's market director, Annette Nazareth, to fill Goldschmid's slot.