SEC chairman Christopher Cox was having a bad day yesterday.
The Wall Street Journal ran an article critical of Cox’s lack of involvement in the Bear Stearns debacle, writing that he’d been busy at birthday parties and on vacation while the fate of the troubled investment bank hung in the balance.
Cox was also scheduled to give the keynote address yesterday at Stanford’s Director’s College — and everyone at the well-known conference for corporate board members was buzzing. “What would he say in his speech?” “Would he say anything about the article?” Joking wagers were made among the wine-softened crowd seated under a huge tent outside of Stanford Law School.
It turns out he didn’t he need to say much. Joseph Grundfest, Stanford Law professor and former SEC commissioner, introduced the speaker and took the opportunity to defend Cox and skewer The Wall Street Journal.
Grundfest began, holding a copy of the paper in question in front of his nose as he grunted into the microphone. Then he told the crowd that he’d picked up The Wall Street Journal that morning, and after reading the article in question, asked himself: “When did we get a subscription to the New York Post?”
After a few more jokes, Grundfest took a serious tone and argued that the Journal had the story wrong. Cox should’ve been nowhere near the Bear Stearns bailout deal, which saw JP Morgan buy the failing firm with the help of the feds, the Stanford professor strenuously opined.
Grundfest said that Cox was right to let the Federal Reserve and Treasury take the lead, because it would be unseemly for the regulator of financial markets to be involved in a deal where he could be perceived as playing favorites.
The crowd apparently liked Grundfest’s defense. They laughed and cheered.
Cox himself only addressed the article fleetingly during his rather dry speech, beginning with a joke. He was glad that the dinner was steak and not barbecue, he said, because that’s what he was in the Journal article.
Looking a little stiff, he said that he’s not surprised by such articles with inaccurate or incomplete reporting. He told the crowd that he’d just keep his head down and continue to do his job. He also said that one weekend that the WSJ claimed he was on vacation, he was actually at a press conference in Washington. The speech itself was on a renovation of financial disclosure (details here).
After receiving a standing ovation, Cox returned to his table where he refused to talk about the article any further with your faithful Legal Pad correspondent.
— Zusha Elinson