Pressure Increases From Left For SEC Chair To Step Down

It’s safe to say that Mary Jo White’s leadership of the Securities and Exchange Commission has been pretty disappointing. On her watch, bankers and traders have felt free to break the law again and again, knowing the SEC is too craven and impotent to do any more than demand fines. Instead of fearing the law, Wall Street considers paying fines a cost of doing business.

After two years of lax enforcement and broken promises Sen. Elizabeth Warren (D-Mass.) last week sent a scathing letter to White calling on her to “step up to the job for which you have been confirmed.” Now, the Project on Government Oversight (POGO) is calling for her resignation.

When Obama nominated White, he portrayed her as a no-nonsense former prosecutor and warned, “You don’t want to mess with Mary Jo.” But where some saw a champion for investors and working Americans, others saw a woman who made money defending the banks she was about to regulate from the agency she was about to be the chair of.

Among her criticisms, Warren lamented how the Commission was paralyzed by conflicts of interest stemming from White’s past and her husband John W. White’s work defending banks at the New York law firm Cravath, Swaine, and Moore. As POGO points out, conflicts of interest extend well beyond White, and these conflicts that do not always lead to recusals. By surrounding herself with fellow Wall Street insiders, White aided and abetted the capture of the SEC by the very industries it seeks to regulate. The agency is paralyzed by senior employees with questionable allegiances, seeing how many of them have cushy Wall Street jobs waiting for them when they leave. It is, after all, difficult to do your job if it involves alienating past and future employers.

The revolving door plagues all regulatory agencies, but the SEC is especially vulnerable because Wall Street can pay sky-high salaries to ex-SEC employees. The stakes for Wall Street are also incredibly high when it comes to SEC decisions.

But however high the stakes are for Wall Street, the main stakeholders at the SEC will always be us. We need a leader at the SEC who understands her task is not to safeguard the profits of Wall Street but to protect the savings and pensions of the rest of us. If White is not up to the task, she needs to go. The SEC is too important to be under Wall Street’s thumb.

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