Cox warns US not to drop accounting rules
SEC chief says that the US should learn fom the mistakes of the 1987 stock market crash and not consider drastic accounting changes
Christopher Cox has warned against making a knee-jerk reaction to the
financial crisis and bowing to pressure to change accounting standards.
The SEC chairman made the comments as he testified before the House of
Representatives’ Committee on Oversight and Government Reform in relation to the
financial crisis gripping the global economy.
‘If we continue to do what we were doing, and just do more of it, we will
undoubtedly repeat history. I remember working in the White House in 1987,
helping to determine how to respond to a 25% drop in the markets in one day,’
said Cox.
‘I see the very real similarities to current events — institutions borrowing
short and lending long, housing bubbles in California and Florida, pressure to
change accounting rules to give savings and loans time to right their balance
sheets. The nation subsequently spent upwards of $150bn to clean up the
wreckage.’
In his
testimony
Cox also said that the SEC would be tougher on company’s accounting and
auditing.
‘In strengthening the role of the SEC,[the watchdog will] build on these
traditional strengths — law enforcement, public company disclosure, accounting
and auditing, and the regulation of exchanges, broker-dealers, investment
advisers, and other securities entities and products.’