WASHINGTON - President Bush nominated conservative Rep. Christopher Cox as chairman of the Securities and Exchange Commission yesterday, prompting speculation that the agency would take a more pro-business approach after it battled financial scandals at Enron Corp., WorldCom Inc. and other companies in recent years.
Business organizations praised Bush's selection of the California Republican and said they expected that he would focus more on regulatory reform rather than on the enforcement and stiffer rules that characterized the turbulent reign of departing Chairman William H. Donaldson.
Critics said they feared that Cox would pull back from aggressive SEC enforcement, which has resulted in big fines for some of the nation's largest companies in recent years and in tougher accounting and corporate governance regulations.
"I think we're going to see something of a U-turn," said John Coffee, law professor and securities regulation expert at Columbia University. "The moment you lay off the night watchman, the greater is the likelihood you will have more Enrons and WorldComs."
At the same time, Coffee called it a "formidable appointment" and said Cox, a former corporate lawyer, is "well-versed in finance and law."
In naming Cox, the president called him a "champion of the free enterprise system" who would become "an outstanding leader of the SEC."
Bush said Donaldson, who announced he would step down as chairman at the end of this month, "has done an exceptional job" in helping restore investor confidence in the aftermath of corporate scandals. The president said Donaldson, a former Wall Street official, "took this post as our economy was faced with a crisis in investment."
Those remarks seemed to indicate that Bush believes the crisis has largely passed and that he anticipates the SEC will take a different approach under Cox, whose appointment requires Senate approval. Nonetheless, Bush said Cox would press for strong regulation.
"I've given Chris a clear mission to continue to strengthen the public trust in our markets so the American economy can continue to grow and create jobs," the president said.
The U.S. Chamber of Commerce hailed the choice. David Hirschmann, senior vice president for the chamber, said Donaldson was brought in to handle a crisis in financial markets triggered by scandal.
Now that these scandals have dissipated, he said, the organization is hoping Cox will balance enforcement efforts with modernizing rules and regulations affecting corporate America that would foster investment and growth. The business community feels some of these rules have hampered its competitiveness, Hirschmann said.
Cox, 52, a low-key but ambitious lawmaker who holds joint graduate degrees in business and law from Harvard, would bring a strong pro-business attitude to the SEC. He worked as a senior associate counsel in Ronald Reagan's White House before winning election to Congress in 1988. Twice he considered running for speaker of the House, but he dropped out each time when support did not materialize.
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Age: 52; born Oct. 16, 1952, in St. Paul, Minn.
Education: Bachelor's degree from the University of Southern California; master's and law degrees from Harvard University.
Experience: Republican congressman from California, 1989-present; senior associate counsel to President Ronald Reagan, 1986-1988; co-founder of Context Corp., 1984-1986; lecturer on business administration, Harvard Business School, 1982-1983; partner, Latham & Watkins law firm, 1978-1982, 1984-1986.