WASHINGTON (Reuters) - the Securities and Exchange Commission fired all implement when it operated law professor of the University of Texas Henry Hu at the head of the new first division created the Agency in 37 years.
An exceptionally generous temporary contract brought Hu in Washington in September 2009 to oversee the new Division of risk, strategy and financial Innovation, the part of the effort of the Agency to address an embarrassing failure to catch swindler Bernard Madoff and adapt to the new products of Wall Street who could become the next financial weapons of mass destruction.
Hu, with three degrees from Yale and is the author of articles on derivatives and financial regulation, seemed perfect to lead the "think tank" division the Chairman of the SEC, Mary Schapiro loaded with anticipation of the problems of the market.
But Hu left in January, leaving the division looking for a Chief Economist and the new permanent Manager, and questions swirling how much has been accomplished in its approximately 16 months job.
His hiring was welcomed by some outside agency as an effort of creative to bring the best talent, but the arrangement rubbed some members of staff in the right direction, including an SEC decision to cover the major part of his daily living expenses.
SEC documents obtained by Reuters through an application of the Freedom of Information Act show that Hu sought reimbursement for thousands of dollars per month. The Agency's internal watchdog is now examining whether the arrangement was appropriate.
As the SEC works to implement new rules under the law of financial review Dodd-Frank tens and to reorganize the structure of the equity market, critics say that the achievements and the direction of the new division are not yet clearly defined.
Division results from the fusion of economic analysis and risk assessment, the offices of the SEC. Later, in March 2010, the Office of interactive communication, which seeks to make more accessible financial disclosures - has been added.
The objective was a multidisciplinary division, but we know not if she was really successful to incrementally removed the dry culture which is known for placing a value higher than on the role of lawyers.
That could leave the SEC vulnerable as Wall Street continues its dizzying pace of product development, and that the SEC has tight economic need and analysis to justify its legislation and to prevent the successful legal challenges of the market.
For some, the mission of the new division, known for short as "Risk fin," was still too confused.
Roy Smith, a Professor of finance at the Stern School of Business the University of New York, said that his first impression was the work of the division seemed to "vague" with a lot of "cosmetic functions for it."
"I'm sure they meant well at the time," said Smith, a former partner at Goldman Sachs.
A VOICE FOR THE NERDS
Critics and the employees of the Agency told Reuters in Schapiro interviews relied too much on a single person without stating clearly how it would work.
SEC employees, who requested anonymity, since they were not authorized to speak publicly, saying that President's Office had to send an advisor to keep an eye on the division in the last months of Hu Jintao. In another action around this time, now Director acting division, Jonathan Sokobin, Economist, is unofficially put in charge of the execution of things while Hu has remained as the official Director.
In a series of e-mails, Hu said Schapiro offered him "chance" to serve as an agent of change in one place with "established culture of long date, standards and practices."
Now back to the University of Texas and wrote several books, Hu praised the merits of the achievements of the division's mandate. Such a success, he told Reuters, was to elevate the stature of economists and other types of non-lawyers who have not traditionally had a voice to the sec.
"Staff SEC was step of traditional lawyers - nerds like myself, giving a real, highly visible seat at the table," he said in a statement by e-mail.
But Schapiro appears to have taken account of complaints that economists have been devalued by the new structure of the division.
She said Senate Banking Committee in February that the new head of the division would also be the title of Chief Economist, restore the stature of this position at the Agency.
Former SEC Chief Economist James Overdahl, who left the SEC in March 2010, said the initial decision to the junior position to the Director of the division of Schapiro had poorly his effort to replace.
"People noticed that the commission had not an economist in the Office of the President", he said.
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