SEC’s Cox: Wall Street’s Capital-Raising Is ‘Healthy Trend’

Jun.10, 2008 in Market Outlook

Last Update: 6/10/2008 1:03:48 PM

By Judith Burns
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–Wall Street’s regulator said Tuesday he welcomed efforts
by investment banks to raise capital, calling it “a healthy trend.”

“We have been encouraging each of the major investment banks to strengthen their
balance sheets, and each has been doing this in their own way,” Securities and
Exchange Commission Chairman Christopher Cox said. “This has been a healthy
trend.”

Cox spoke to reporters after an SEC roundtable discussion on international use of
data-tagging technology for financial reports. His comments came a day after
Lehman Brothers Holdings Inc. (LEH) announced a nearly $3 billion quarterly loss
and plans to raise $6 billion more in capital.

Asked whether the SEC is stepping up oversight of Lehman, Cox said that U.S.
regulators have been scrutinizing data from all major Wall Street investment
banks “on a daily basis for some time.”

New York Federal Reserve Bank President Tim Geithner’s call for changes to help
markets manage fallout from the failure of a major financial institutions didn’t
come as a surprise, according to Cox. He said Geithner’s remarks on Monday to the
Economic Club of New York reflect ideas that have been under discussion among
regulators in Washington “for many months.”

However, Cox predicted that any changes to U.S. financial market regulation in
the wake of the mid-March collapse of Bear Stearns Cos., now part of JPMorgan
Chase & Co. (JPM), are likely to be left to Congress in 2009.

Cox said there has already been “a fair amount of spontaneous analysis” of
regulatory responses to Bear’s demise and that regulators already have made
changes, such as encouraging big investment banks to increase their capital and
liquidity. He said he expects that a more formal study of the factors leading up
to the event, and its aftermath, “will probably occur at some time.”

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