The chief economist of the Securities and Exchange Commission, who is an expert on the financial instruments that figured largely in the 2008 crisis, is leaving his position for the private sector.
The SEC has announced that James Overdahl will leave the agency at the end of March to become a vice president of National Economic Research Associates, an economic consulting firm.
News of his departure comes a few weeks after the SEC imposed new curbs on the practice of short-selling stocks over the objections of the two Republican commissioners on the five-member panel, who said there was a lack of economic data to justify the move.
Under a reorganization last September, the SEC's Office of Economic Analysis headed by Overdahl — which had been independent — was merged into a new Division of Risk, Strategy and Financial Innovation.
Overdahl said Tuesday the SEC action on short-selling wasn't a factor in his decision to leave. He said he began seeking a job outside the SEC well before the Feb. 24 meeting at which the agency adopted the new restraints.
"Our job is to make sure that our commissioners have transparent and rigorous analysis before them when they make their decisions," Overdahl said in a telephone interview. "We fully recognize that there are many elements beyond our analysis that enter their calculations."
Short-sellers bet against a stock in a practice that is legal and widely used on Wall Street. They borrow a company's shares, sell them and then buy them when the stock falls and return them to the lender — pocketing the difference in price.
SEC Chairman Mary Schapiro and the two others who voted for the new restrictions said they were aimed at bolstering investor confidence by preventing spiraling stock-selling sprees that can stoke market turmoil. Investors and lawmakers have clamored for the agency to put such brakes on trading moves they say worsened the market's downturn in the fall of 2008.
But opponents say the new curbs could eliminate the benefits of short-selling — bringing capital into the markets and accurate stock prices to the surface — and will actually hurt investor confidence.
Overdahl was appointed in July 2007 by Christopher Cox, Schapiro's predecessor as SEC chairman under President George W. Bush. Before coming to the SEC, he was chief economist at the Commodity Futures Trading Commission from 2002 to 2007.
Overdahl is co-author of several books on derivatives, the complex financial instruments widely blamed for hastening the crisis in late 2008 and nearly toppling the insurance conglomerate American International Group Inc. The federal government supported AIG with more than $180 billion in taxpayer aid.
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