Corporate Governance and Delaware Chief Justice Steele: Those Unfit Federal Judges

We are discussing the recent interview with Myron Steele, the Chief Justice of the Delaware Supreme Court.  The interview be found here.

Chief Justice Steele doesn't view the SEC or the federal courts as having sufficient resources or "familiarity" with corporate governance to oversee the process.  Again, the Q&A from his intereview:

• If Washington pushes ahead with the proposed reforms, who will monitor the changes?

• Chief Justice Steele: The federal answer is to have it monitored by already overworked SEC and by 1,500 federal district court judges, the percentage of which having any familiarity with corporate governance is impossibly low and unsafe.

Two observations.  First, with respect to many of the proposals, the monitoring agency will more likely be the stock exchanges.  Whether the governance bill put forward by Congressman Frank (HR 3269) or the shareholder bill of rights proposed by Senator Schumer, many of the proposed changes to the substance of corporate governance are written as listing standards for the exchanges, albeit with some implementation authority for the Commission.

Second, while the judges on the Delaware courts are very smart and very knowledgeable about corporate governance issues, the federal bench isn't half bad.  The judges there have generally managed to handle a substantial number of derivative suits (those brought on a diversity basis) and to oversee enforcement of the federal securities laws, with some level of competence. 

To view them collectively as sufficiently unfamiliar with corporate governance to be "unsafe" is to understate the skill level of the federal courts and to provide an interesting insight into what the Chief Justice thinks about the "unique" preeminence of the Delaware state courts.