LARRY DOWNING/REUTERS - President Obama stands next to Mary Jo White, a former United States attorney, after he announces her to be the next chairwoman of the Securities and Exchange Commission. Since White was nominated to lead the agency, some have cited her work with Wall Street clients.
Usually it’s the government workers who come under scrutiny when they leave an agency and land a high-paying job that leverages their contacts within the bureaucracy.
But Mary Jo White, President Obama’s pick to head the Securities and Exchange Commission, is giving up a lot of money to join the government. And it’s her contacts on the outside that are causing the stir — specifically her most recent work defending Wall Street clients at Debevoise & Plimpton.
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While Obama highlighted White’s reputation as a feisty New York prosecutor who took down terrorists and mobsters, investors’ advocates have questioned whether she’ll be as tough on Wall Street given her most recent stint in the private sector.
Now, two developments have refocused attention on these questions: a newly released list of White’s clients at Debevoise and a report from the Project on Government Oversight (POGO).
A few days ago, White disclosed her clients to the federal government as required by law. Among them were JPMorgan Chase, Deloitte & Touche, General Electric and Verizon Communications. Also listed were individuals such as Rajat Gupta, the former Goldman Sachs board member convicted of insider trading, and former Bank of America chief executive Kenneth Lewis. Three clients were left off the list because of attorney-client privilege, the disclosure form said.
In a letter to the SEC, White said she would not participate in any matter involving a former client for one year after working with that client, unless she is authorized to do so. White also said she would retire from Debevoise if confirmed and refrain from taking part in agency work involving the firm’s clients.
The retirement means that she will give up her law firm salary — about $2.4 million last year — for a government salary of about $164,000 a year for SEC chairmen. However, White has opted to receive a lump-sum payment of about $2 million in retirement pay within 60 days of taking the SEC job, according to disclosure forms.
But the POGO report, released Monday, concluded that it’s never that easy to cut off ties — or perceived ties — to a past client. The pervasiveness of the revolving door in extreme cases can lead to “regulatory capture,” a climate in which an agency is effectively taken over by the industry it regulates.
Inside and outside the SEC, many have said that hiring talent from industry to the agency gives the agency much needed expertise. Once they join the government they recuse themselves on a case-by-case basis when potential conflicts arise, the agency said.
But the POGO study concluded that the rules restricting those hires from handling work that could affect former clients do not go far enough, a sentiment echoed by Sen. Charles E. Grassley (R-Iowa).
“It’s especially important for the SEC to fix this problem with the arrival of a new chairman who, if confirmed, would bring a lot of good things to the commission but also a lot of connections to the securities industry she’d be regulating,” Grassley said in a statement Monday.
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