Standing Up to Wall Street (and Congress)

In 1992, Arthur Levitt co-chaired a fundraising dinner for William Clinton. The dinner raised $750,000 (p. 7). Clinton was elected President, and Levitt got the job he wanted: Chairman of the Securities and Exchange Commission. Levitt, a former Chairman of the American Stock Exchange and a connected Democrat, was well qualified for the job. His, however, became a pyrrhic victory when accountants, issuers, broker-dealers, and other special interests used their own political connections to frustrate just about everything he sought to do. Levitt tells the story of his struggle against these well-funded interests in Take on the Street. One of his most troubling revelations is how little independence the Commission, a purportedly independent agency, actually has in the face of political pressure from Congress. Combine that pressure with Congress’s dependence on campaign contributions from industries regulated by the Commission and the recipe for regulatory capture is complete. Levitt is right that investors are not represented as an interest group on Capital Hill. Lack of investor representation, coupled with Congress’s willingness to interfere with the work of the Commission, required Levitt to pick his battles carefully, and it is not always evident that he did so. Hindsight now provides Levitt with an opportunity to identify areas in which, despite the treacherous political waters of the 1990s, he could have been more effective in protecting investors. Rarely, however, does the book reassess Levitt’s own priorities or approach. Instead, in concentrates on explaining why he pursued the regulatory agenda that he did.