An excerpt from Take On The Street, Arthur Levitt's new book published by Pantheon books, follows this interview of the author by Journal of Indexes Editor Jim Wiandt, who asks questions relating to Levitt's tenure at the SEC. Levitt was chairman of the Securities and Exchange Commission from September 1993 to February 2001.
Wiandt: What did you think about the publishing process? Did you enjoy writing the book?
Levitt: Yes, I enjoyed writing the book enormously. I enjoyed that more than selling the book, which I enjoyed less.
Wiandt: What was the thing that you enjoyed most about writing the book? Was it going over all the things in your mind?
Levitt: Being able to crystallize thoughts that were fairly random during the time that I was there, because of the huge pressures. It gave me time to reflect on how the experience played out, in terms of investor interest. Trying, I think succeeding, in designing a comprehensive pattern of the various efforts that we engaged in, in bringing about change.
Wiandt: If you were made global king of all things financial, what are some structural changes that you would implement in market regulation?
Levitt: I would not implement changes. I would let the market regulate itself and just monitor changes in the market. But I would not presume to impose changes.
Wiandt: Our readership is composed of mainly financial advisors, plan sponsors consultants, and index industry experts. Do you have a message for any of these constituencies? The index industry?
Levitt: I would say that by placing investor interest above all others, that you will serve your own interests best. And I would also say that you should never underestimate investor intelligence. Investors may get caught up in the hype of the moment, but eventually they figure it out, and those people¾interests who have brazenly taken advantage of investors¾will pay a fearful price. For example, recently, the auditors and the corporate boards have been held to very high standards to the point of even losing their franchise.
Wiandt: What do you think about the privatization of Social Security?
Levitt: What kind of privatization? If we're talking about unlimited choice as is found in many retirement plans now, I oppose it. If you're talking about a plan in which you guarantee some % of returns and limit the riskiness of investments, I might be in favor.
Wiandt: One thing that was very interesting to me in the book was the appendix It was great.It seems like it was added sort of after the fact.
Levitt: It was. We thought of it late in the process, and the only way we could get it in was to put it in as an appendix. I was very pleased with how it turned out.
Wiandt: Next question, on decimalization, do you think there should be any minimum spread?
Levitt: No, I do not.
Wiandt: We should be able to go out to even thousandths of a penny, whatever the market takes it at?
Levitt: I think the market internationally is not going to impose caps. And for us to do that in my judgement would be a mistake