MarketWatch: Obama gets a claim to another Kennedy legacy

WASHINGTON (MarketWatch) -- The diagnosis May 19 of Ted Kennedy's brain tumor focused attention on the Massachusetts senator's endorsement of Barack Obama for the Democratic nomination, and virtual designation of him as heir to the Kennedy legacy in politics. In a gracious gesture, the Illinois senator drove home the point when he stepped in for Kennedy as commencement speaker at Wesleyan University on May 25.
In a little-heralded event earlier this month, Obama was able to lay claim to another, lesser known Kennedy legacy. On May 14, in an announcement that was overshadowed by the Johnny-come-lately endorsement of Obama by John Edwards, the Democratic frontrunner also won an endorsement from three former chairmen of the Securities and Exchange Commission.

Teddy Kennedy's father, Joseph Kennedy, was appointed by President Franklin Roosevelt as the first chairman of the SEC when it opened its doors on July 2, 1934 as the new watchdog for the securities markets, to help prevent the kinds of abuses that led to the stock market crash in 1929. Joe Kennedy generally is credited with getting the fledgling agency off the ground with the right balance of support for the markets and protection for investors.

The endorsement of Obama by a bipartisan group of Joe Kennedy's successors - Arthur Levitt, David Ruder and William Donaldson - may help him as much in a general election campaign as the one from Edwards. In their statement, the SEC chiefs praised Obama for his support of "balanced regulatory reform."
"We believe Senator Obama can provide the positive leadership and judgment needed to take us to a stronger and more secure economic future," the three men said in their statement, which for good measure was also signed by former Federal Reserve chairman Paul Volcker, who endorsed Obama in January and has been an adviser since then.

Two of the former chairmen were Republican appointees (the SEC chairman generally belongs to the party of the president) - Ruder, chairman from 1987 to 1989, was appointed by Ronald Reagan, and William Donaldson, at the SEC from 2003 to 2005, was appointed by George W. Bush. Donaldson, in particular, is an old friend of the Bush family, and his endorsement of a Democratic candidate takes on a particular significance.
No less significant was the decision by Arthur Levitt, who was appointed by Bill Clinton and stayed through the entire Clinton administration to become the longest-serving chairman in SEC history, to throw his support to Obama instead of Hillary Clinton.

.....

In a March op-ed for The Wall Street Journal titled "Regulatory Underkill," Levitt, this time by himself, chided Paulson and others concerned that "regulatory overkill" was making U.S. capital markets lose out in the global competition for IPOs. "How ironic that this group was fixated on a questionable measure of market health," Levitt wrote, "while the seeds of today's market turmoil were being nourished not by regulatory excess, but by fundamental failures in oversight at almost every level."
So Levitt and his friends were looking for a would-be president who will hold the line on tough enforcement, without going overboard with radical new solutions. They evidently found their candidate in Barack Obama.

As if to vindicate their choice, Austan Goolsbee, the University of Chicago professor who is Obama's main economic guru, told a reporter from Dow Jones newswires last week that a President Obama would clamp down on investment banks. According to this report, Goolsbee said the senator firmly believed that any financial institution that has access to the Fed's discount window - one of the main features of the Fed's rescue of Bear Stearns - should be subject to enhanced regulation.

.....