SEC might be productive despite 2-2 split

The Securities and Exchange Commission could become one of the surprises of 2013 in Washington by playing against type in a town known for dysfunction.
Despite its 2-2 split, the agency may be able to finish some work during the chairmanship of Elisse Walter. Ms. Walter, who was elevated from her position as a commissioner when former Chairman Mary Schapiro departed in December, has started her tenure by demonstrating her skill in finding common ground among disparate views.
“I’m … on something of a listening tour — clarifying my own thoughts and keeping an appropriate perspective by listening to ideas, questions and complaints from people in and out of the agency,” she said at the Jan. 18 meeting of the Investor Advisory Committee.
Her approach has struck a chord with one of the two Republican commissioners, Daniel Gallagher. After a speech at the Chamber of Commerce last week, Mr. Gallagher told reporters that Ms. Walter is casting a wide net to get feedback while putting together an SEC agenda.
“She’s been tremendous on outreach, getting all our input,” Mr. Gallagher said. “She’s very consensus-oriented. I do think it’s going to be a productive year. The personalities are right.”
In her address to the Investor Advisory Committee, Ms. Walter said that forecasts of gridlock are overblown.
“And despite the often-mentioned 2-2 divide, I find that my fellow commissioners — as well as commission staff — are eager to find common ground and move forward in a practical and effective manner,” she said.
There are two areas where Ms. Walter may be able to cobble together consensus, even if she’s in office for just a short time. One is on a provision of the JOBS Act that would allow private offerings to be advertised to the public.
She profusely thanked the Investor Advisory Committee for its recommendations to add more investor protection to the proposed rule, noting that they were unanimously approved. But she also asserted that the SEC will promulgate a rule and respond to the will of Congress, which approved the measure unanimously.
That sentiment, no doubt, appeals to Mr. Gallagher and Capitol Hill Republicans, who have been prodding the SEC to move faster on the matter.
The other area where progress is likely is on money market fund reform. Ms. Walter supported Ms. Schapiro’s effort to impose more-stringent rules on the investment vehicles. Ms. Schapiro’s original proposal failed to get an SEC vote over the summer. But now, after intervention by the Financial Stability Oversight Council, it looks as if reform has new life.
In his appearance, Mr. Gallagher said he hopes that the SEC will offer a new proposal “soon.” He also reiterated that he has an open mind about requiring the funds to have a floating net asset value.
“That would be a great avenue to explore,” Mr. Gallagher said. “There are pretty significant tax and accounting issues that need to be addressed that haven’t been addressed.”
Like any work that the SEC does, the money fund proposal will require a lot of work. Of course, there could be many times when the 2-2 commission falls into a deadlock. But for now, it looks as if the Walter Era, no matter how it lasts, may be more peaceful and productive than anticipated.