I've been a big proponent of the dump William Donaldson movement. The nominally Republican SEC Chairman has been a disaster: he consistently sides with the Democrats on the Commission, consistently supports expanding government regulation (see, e.g., hedge funds and mutual funds), and has pursued Spitzer-like questionable enforcement cases. (Type Donaldson into the search box in the left sidebar of you want tons of documentation.)
Unfortunately, as the WSJ ($) points out today, firing Donaldson would be a tough call for Bush:
Getting rid of Mr. Donaldson would bring its own complications. For one, he is credited with calming the waters after the stormy tenure of former SEC Chairman Harvey Pitt, who was criticized for not uncovering corporate fraud at companies like Enron Corp. The SEC also was seen as taking a back seat to New York Attorney General Eliot Spitzer in revealing conflicts of interest on Wall Street. ...
Mr. Donaldson's most potent weapon might be the support he enjoys from powerful lawmakers on Capitol Hill, including Rep. Michael G. Oxley (R., Ohio), chairman of the House Financial Services Committee, and Sen. Richard Shelby (R., Ala.), who is chairman of the Banking Committee. ...
If the White House replaces Mr. Donaldson, Mr. Bush runs the risk of looking like he's cowing to business, and the SEC once again could become a lightning rod for criticism. ...
There is another reason President Bush might want to keep Mr. Donaldson as chairman. Political observers say the president will need a tough securities watchdog if he expects his Social Security overhaul initiative to pass. The plan, which would let taxpayers create private investment accounts, would require vigorous oversight of the financial markets. Mr. Bush might not want to risk a debate over how committed the White House is to policing financial fraud.
Finally, Donaldson is an old family friend of the Bushes. But the Journal has a new solution:
The White House will have the opportunity to replace the agency's two Democratic commissioners next year with the departure of Harvey Goldschmid, whose term already has expired, and Roel Campos, whose term expires in June. While Senate Democrats can recommend successors, the White House has the final say about who is nominated. The nominee must be confirmed by a majority of the Senate.
Replacing Goldschmid would be a particularly helpful move, as he's been the intellectual force behind a lot of these anti-business moves at the Commission. The problem will be to find some pro-business Democrats. Are there any left or have they also become economic populists? (Hmm... I wonder what would happen if I changed my party registration to Democrat?)
