That's good news because Donaldson has been a strong and confidence-restoring chairman in his two years on the job.

The complexities arise when one figures that at some point this year there likely will be two new Democratic members of the five-member regulatory commission. There also could be times when there are fewer than five commissioners on the job as a changeover takes place.

The simple read of this is that the commission is less likely to make bold new regulatory moves this year. That's based on the increased feeling (at least in certain business circles) that post-scandal reform has already gone too far. There has been increased political pressure to bring that contention home to the Bush administration.

That simple read is also based on the fact that two bold regulatory moves in 2004 were approved via 3-2 votes. The two dissenters in those cases, Republicans both, are scheduled to stay on through 2005, while the two Democrats who joined Republican Donaldson to form majorities are likely to move on.

But that is an overly simple way of looking at it. There's no reason to automatically assume additional bold regulatory moves are desperately needed or definitely positive this year.

Earlier this week, Donaldson received his most robust public endorsement from the Bush administration since the November election. During the typical changing of the guard among top administration officials that follows an election, it was reported that some business interests were fed up with Donaldson.

The support came Jan. 10 from President George W. Bush, who said of Donaldson, "I think he's doing a fine job."

It was in response to a question during an interview with reporters from The Wall Street Journal.

On the more general subject of the state of federal regulation of public companies, Bush in that interview praised the SEC and Justice Department for their work in a difficult period, saying they've been doing a good job of sending the signal "that if you break the law, there will be consequences."

Bush went on to talk about the need for balance "when it comes to government reach ... What you don't want government to do is to freeze investment. And there's an interesting balance there. And I think we're in balance right now."

The proposal currently before the SEC that would most change regulatory balance in the corporate governance world - increasing the power of large shareholders to nominate corporate directors - is not likely to advance due to long-standing differences of opinion on the commission.

There are plenty of other important pending SEC decisions, such as those on equity market structure and disclosure rules for new securities offerings. But those don't speak to a real increase in regulatory reach.

There also are plenty of rules recently approved or in process of going into effect, many mandated by the 2002 Sarbanes-Oxley Act aimed at corporate and accounting reforms in the wake of a series of corporate scandals.

The two Democrats scheduled to depart (Harvey Goldschmid will resume teaching law in the fall; Roel Campos's term expires in June) joined Donaldson on controversial 3-2 votes in 2004 to mandate independent chairmen for mutual funds and registration with the SEC for hedge fund advisers.

The White House gets to nominate the successors to Goldschmid and Campos. They have to be Democrats, but presumably the search will center on Democrats less inclined toward rule-making.

But it's an independent agency, so once on board there's no easy predicting how commissioners are going to vote. After all, the business displeasure with Donaldson is based on a perception that he's been more of an activist than was expected.

-- Neal Lipschutz is senior editor, Americas, Dow Jones Newswires