WITH THE RESIGNATION of William H. Donaldson as chairman of the Securities and Exchange Commission, investors are losing a much-needed advocate.
Mr. Donaldson came into office just 28 months ago with deep business credentials - having led insurance giant Aetna and the New York Stock Exchange - but proved to be an aggressive and independent regulator of the nation's financial markets.
Let's hope that his successor at the SEC - President Bush quickly announced he's nominating California Rep. Christopher Cox - also rises to the occasion.
Mr. Cox, a member of the House Republican leadership with decidedly conservative economic views, has been hailed as a "free-enterprise" champion, code for the relatively light regulatory hand that U.S. business interests would love to see at the SEC.
But if there is any doubt that the agency should continue to serve as a strong, not weaker, watchdog, just look back to 2003, the start of Mr. Donaldson's short tenure, when American markets were reeling from corporate scandals, the SEC was underfunded and his predecessor, Harvey L. Pitt, was costing it credibility with his political gaffes.
With striking finesse, Mr. Donaldson moved quickly to reinvigorate the agency - gaining big budget increases, handing out record fines to transgressors and passing new rules, including those forcing mutual-fund boards to be more independent, ensuring that investors get the best available prices on stock trades and carrying out the more stringent corporate accounting demands of the 2002 Sarbanes-Oxley Act.
Even as public confidence in stock markets rebounded, however, the push back from the business community gained steam, so much so that Mr. Donaldson has spent the last year in open warfare with the other two Republican SEC commissioners as they tried to block further reforms. Corporate clamoring for the SEC to lighten up in enforcing the tighter financial controls mandated by Sarbanes-Oxley also has been building.
A certain degree of ebb and flow is perhaps to be expected with a change at the top at the SEC. But Mr. Donaldson has demonstrated the value that results when there's no doubt that the SEC is watching. If that were lost in this shuffle, investors could end up paying a big price.