In a blistering letter Tuesday, Sen. Elizabeth Warren, D-Mass., all but called Securities and Exchange Chair Mary Jo White an incompetent regulator.
“You have now been SEC chair for over two years, and to date, your leadership of the commission has been extremely disappointing,” Warren wrote. “At your confirmation hearing, you stated without reservation that you would implement a strong enforcement policy at the SEC.”
White is a former top federal prosecutor in New York, and her appointment to head the SEC was taken at the time to mean the agency would become a force to be reckoned with on Wall Street.
Instead, critics have complained that the SEC has gone soft on Wall Street. Liberal groups were incensed when White announced in late May that she was hiring a top lawyer from Goldman Sachs, Andrew “Buddy” Donohue, as her new chief of staff.
Warren accused White of providing misleading information recently when pressed about the timing of delayed new rules requiring publicly traded companies to disclose their CEOs’ pay, the midpoint pay for company employees and a ratio between the two.
Particularly irking Warren, the SEC continues to settle cases with Wall Street firms and securities companies without requiring admissions of guilt. In her letter, Warren said that since June 2013 the SEC had entered into 520 settlements of enforcement cases, requiring admissions of guilt in just 19, or less than 4 percent.
“In fact, the record of the SEC under your leadership is even worse than those numbers suggest,” Warren wrote. “In 11 of these 19 cases, SEC required only a broad admission of facts specified by the SEC rather than requiring that these firms admit to violations of specific securities laws.”
John C. Coffee Jr., a nationally recognized securities law professor at Columbia University in New York who frequently testifies before Congress, echoed Warren’s complaint.
“Right now, I see an SEC that seems somewhat equivocal, and somewhat weak-kneed and generally unwilling to take stern action against banks,” Coffee told McClatchy, adding that “indeed, if you’re convicted, everyone else takes action against you, but the SEC assures you it won’t mean a thing.”
In a statement shared with McClatchy, White fired back at Warren and critics.
“I am very proud of the agency’s achievements under my leadership, including our record year in enforcement and the commission’s efforts in advancing more than 30 congressionally mandated rulemakings and other transformative policy initiatives to protect investors and strengthen our markets,” White said.
White House spokesman Josh Earnest declined comment on White’s performance, noting the SEC is an independent agency.
President Barack Obama, he said, “does continue to believe that the reasons that he chose her, based on her experience and her values, continue to be important today. And the president does continue to believe that she is the right person for the job.”
The SEC differs from the Federal Reserve, the Federal Deposit Insurance Corp. and other regulators in that it doesn’t monitor financial institutions for safety and soundness of operations. The SEC’s mission is investor protection, not taxpayer or consumer protection, and White hinted at that in her response.
“Senator Warren’s mischaracterization of my statements and the agency’s accomplishments is unfortunate, but it will not detract from the work we have done, and will continue to do, on behalf of investors,” White said.
Making the matter personal, Warren noted the large number of cases before the SEC in which White has had to recuse herself because of the time she’d spent defending Wall Street firms while in private practice at the firm of Debevoise & Plimpton.
White’s husband. John W. White, is still employed by the law firm of Cravath, Swaine & Moore, which represents companies with business before the SEC. Warren said White had had to recuse herself from 10 investigations of clients represented by her husband’s firm. The senator pointed to published reports that suggested companies “might seek to hire your husband’s firm to ‘neutralize’ you.”
Big banks such as Goldman Sachs and JPMorgan Chase have generally been in the crosshairs of Warren, who’s a folk hero to liberal groups for taking on the financial sector, which sparked the 2008 economic crisis and deep recession. More recently, she targeted the Federal Reserve over an alleged leak from secret monetary-policy deliberations.