SEC nominee Mary Jo White unlikely to face much resistance from Senate
By Dina ElBoghdady,
Any resistance to the confirmation of Mary Jo White as head of the Securities and Exchange Commission is not likely to follow the usual script, with Republicans trying to land a devastating blow as Democrats work to protect the White House nominee.
In fact, when White appears before a Senate committee for her confirmation hearing on Tuesday, some of the tougher questions are expected to come from Democrats concerned about her close ties to Wall Street. Given her distinguishedlegal career defending some of Wall Street’s biggest names, Democrats want assurances that these relationships won’t interfere with White’s resolve or ability to effectively police corporate America.
“Rather than rough her up, I expect the Republicans will try to push their agenda by getting her to publicly state positions that favor their pet issues,” said Dennis Keller, chief executive of Better Markets, a nonprofit group in Washington that promotes reform of the financial system. “The Democrats are the ones who will most likely raise the troubling issues and want them addressed.”
However, absent some unexpected revelation, the vigorous questioning is unlikely to derail White, 65, whose credentials have something to offer ideologues in both parties.
Lawmakers typically aligned with Wall Street interests are impressed with her work at Debevoise & Plimpton in New York, where she has built a lucrative career representing high-profile clients such as JPMorgan Chase, UBS AG and Morgan Stanley.
Kenneth Lewis, Bank of America’s former chief executive, and Rajat Gupta, the former Goldman Sachs board member convicted of insider trading, were also clients.
But it’s White’s public-sector work as a New York prosecutor that Obama emphasized when he nominated her as SEC chairman. For nearly nine years starting in 1993, White served as U.S. attorney in Manhattan, where she prosecuted several terrorists, including those involved in the 1993 bombing of the World Trade Center.
Before taking that post, White helped put mobster John Gotti behind bars when she was the chief assistant U.S. attorney for the Eastern District of New York. Those are the achievements that have wowed investor advocates and their Senate supporters.
“Wall Street hopes she’ll be the accessible, sympathetic, engaging person they know from Debevoise & Plimpton,” said Bart Naylor, financial policy advocate at Congress Watch. “The investor protection community hopes she’ll be the zealous prosecutor who convicted terrorists and fraudsters.”
Any challenges White faces on Tuesday are likely to be overshadowed by those awaiting Richard Cordray, director of the Consumer Financial Protection Bureau for the past year.
Senate Republicans have blasted the sweeping regulatory powers granted to the newly formed consumer watchdog agency and blocked Cordray’s nomination in 2011. The president appointed him anyway when the Senate was in recess and renominated him in January when he nominated White, packaging the duo as Wall Street’s “top cops.”
Their confirmation hearing is set up as a double feature, with both of them scheduled to appear before the Senate banking committee for two hours, an arrangement that may take some of the heat off White — but not all of it.
Untested as a regulator, White will probably be grilled on her plans for putting in place rules tied to the controversial Dodd-Frank financial overhaul measure and the JOBS Act, which makes it easier for small businesses to raise capital. The SEC is woefully behind on implementing key pieces of these massive bills.
White already was bound to face tough questioning about her commitment to go after misdeeds on Wall Street given her defense background, and the SEC’s soft-on-Wall-Street reputation leading up to the financial crisis. The SEC still gets slammed for negotiating relatively puny settlements with big firms and failing to go after high-level executives.
But the scrutiny may be even tougher than expected now that U.S. Attorney General Eric Holder revived the debate about whether some banks were “too big to jail.” In comments to Congress last week, Holder said some banks were “so large” that it’s “difficult for us to prosecute them” for fear that doing so could undermine the economy.
As SEC chairman, White would have no authority to bring criminal charges because the agency handles only civil cases. But because she is a former leading defense attorney for the banking industry, senators are likely to press for her opinion on the issue. And some of the most vociferous criticism of the too-big-to-jail phenomenon has come from Sen. Elizabeth Warren, the newly elected Massachusetts Democrat, who sits on the banking committee.
Also of concern are the conflicts of interest that may require White to recuse herself from enforcement decisions. In a letter to the SEC, White said she would not participate in matters involving former clients for one year after working with those clients, unless the SEC allows it. Nor would she take part in matters involving clients of Cravath, Swaine & Moore, where her husband, John White, is an equity partner.
John White, former head of the SEC’s corporate finance division, would convert to non-equity status at Cravath if his wife is confirmed.
How soon that could happen, if at all, remains in limbo. The banking committee has not announced how soon after next week’s hearing it will vote on White’s nomination. If White gets the thumbs up, her nomination would go to the full Senate.
But no matter how thoroughly the Senate vets White in advance of that vote, the truth is that lawmakers and the American public won’t really know who they’re getting until she’s behind her desk at the SEC, said Lynn Turner, a former chief accountant at the SEC.
Many before her have defied expectations.
“My experience has been that it’s almost impossible to know how those people will act until you see them there,” Turner said. “And once they’re there and they start acting, there’s not much you can do about it.”