It looks like a silly marginal tax increase on the personal incomes of the top 2 percent is the last thing the barons of Wall Street need to worry about. President Obama is sending a new sheriff into the regulatory fray.
Dealbook reports that Obama will nominate former U.S. Attorney Mary Jo White to head the Securities and Exchange Commission. Sending in White to the SEC is a little bit like calling the Wolf to drive home your blood-soaked vehicle. It’s a bold move for an agency that is often overwhelmed by the impressive lawyers marshaled on behalf of the financial industry in defense of their most complex transactions.
Unlike Elizabeth Warren (bless her heart), Mary Jo White is no academic, she’s a hard-nosed litigator. And she might be exactly what the SEC needs…
Mary Jo White is currently a partner at Debevoise & Plimpton. She was there when I was there (more on that later). She’s got a sterling résumé. She was the first (and only) female U.S. Attorney for the Southern District of New York, the nation’s most prestigious federal prosecutor post. Among her prosecutorial scalps are John Gotti and the people who bombed the World Trade Center back in 1993.
Yes, a lady who has fought the mafia and terrorists is now going to regulate the cartels on Wall Street.
It’s a bold stroke by Obama. The SEC head is usually a very earnest civil servant who is largely overwhelmed by the complexity of Wall Street transactions, and that’s just when the financial services industry is trying to play by the rules. When bankers really get creative and try to bend or break the rules, the SEC is often little more than a speed bump. And Wall Street law firms live for the fun of beating the bag out of the SEC.
If confirmed, White will replace Mary Schapiro. Schapiro, fundamentally, was a lifelong regulator who believed in deregulation. She changed course at the SEC, but I think most people on Wall Street are a little more concerned with the regulatory thoughts of U.S. District Judge Jed Rakoff, or of NYAG Eric Schneiderman, then they are with the latest brain droppings from the SEC.
Remember, Eliot Spitzer only became the “sheriff of Wall Street” because nobody else was doing the job.
And do you know who some of these Wall Street types are trying to hire when the Spitzers, Cuomos, and Schneidermans of the world are busting them up? Mary Jo White. She did white-collar criminal defense at Debevoise and is as knowledgeable about the complexities of the Street as any lawyer a bank could hire. She is currently the head of the Debevoise litigation department. There will not be an institutional informational disparity at White’s SEC; she knows the game.
And she tends to inspire competence — if not palpable fear — in the people who work for, with, or around her. At Debevoise, she was one of those alpha dog partners. She’s the kind of partner that makes other partners stammer, shuffle papers, and try to look really busy and intelligent when she’s in the room. She’s not a screamer, she’s not mean or dismissive. She’s just deadly serious and committed to getting things done.
She is kind of the definition of an “enforcer.” And that seems to be something that the SEC has lacked — enforcement. It’s not about new rules (the President will also re-nominate Richard Cordray to the Consumer Financial Protection Bureau), it’s about enforcing the rules that are already there.
In Mary Jo White, Obama isn’t going for another regulator, he’s nominating a prosecutor. A top prosecutor to police Wall Street.
The SEC: It’s Not Just For Football Anymore.
UPDATE (10:30 AM): Interesting tidbits from the Wall Street Journal:
Ms. White has spent the past decade heading the litigation department at the law firm Debevoise & Plimpton LLP. As an administration appointee, she would be bound by Mr. Obama’s ethics pledge, barring her for two years from working on matters involving her former firm or any of her clients over the past two years.
She also could face complications due to her husband John White’s work. Mr. White, a former top SEC official, is co-head of the group at law firm Cravath Swaine & Moore LLP that advises companies on their public reporting obligations and corporate governance—central SEC issues. Government ethics rules would likely prevent Ms. White from working on matters in which her husband is representing clients before the agency, people familiar with the regulations said.