The Securities and Exchange Commission (SEC) is supposed to regulate Wall Street. But it has become a "captured" agency, using its power to block regulation of Wall Street instead of enforcing regulation of Wall Street. Now Senator Elizabeth Warren (D-Mass.) is fed up and has asked President Obama to remove the current chair because of her "extraordinary, ongoing efforts to undermine the agency's central mission."
Mother Jones reports the story in "Elizabeth Warren Asks Obama to Remove His Top Financial Regulator":
Sen. Elizabeth Warren demanded Friday that President Barack Obama demote his top financial regulator, Securities and Exchange Commission Chairwoman Mary Jo White, who's held the position since 2013. The Massachusetts Democrat raised numerous objections in a letter to White's tenure atop the SEC, narrowing in on White's resistance to writing regulations that would compel corporations to reveal their political spending habits. By refusing to rein in how corporations can spend money, Warren argued, White has allowed dark money to explode under her watch.
"I do not make this request lightly," Warren's letter concluded. "I have tried both publicly and privately to persuade Chair White to direct the agency's resources toward pressing matters of compelling interest to investors and the public, and toward completing those rules that Congress has required it to implement. But after years of fruitless efforts, it is clear that Chair White is set on her course. The only way to return the SEC to its intended purpose is to change its leadership."
President Obama cannot fire White, but can "demote" her by keeping her as a commissioner while moving a different commissioner to be chair. Doing so would send a message that regulators cannot openly work for Wall Street to undermine the regulations they are supposed to enforce. These regulators are "captured" by the "revolving door" understanding that they can collect a fortune from the companies they are supposed to regulate after they leave government, as long as they play along while in government.
Chairwoman Mary Jo White became chair of the SEC on April 10, 2013. Demonstrating how the "revolving door" works, the previous chair, Mary Schapiro, left to become a high-paid lobbyist with Promontory Financial, fighting the SEC and other Wall Street regulators. The April 2013 post, "CEO Pay And SEC Delay," looked at this, explaining in a section titled Revolving Door And Captured Regulators that, "After delaying and delaying the regulations, the head of the SEC left to take a high-paying job with a 'bank consulting' firm." The firm helps "capture" regulatory agencies by hiring regulators who play ball,
[White]'s among many there who are former Washington officials. In fact, Promontory already had a former SEC chair on its roster — Arthur Levitt is on the firm’s advisory board.
Also associated with the firm are Laura Unger from the SEC; Alan Blinder, who was a vice chairman at the Federal Reserve; Frank Zarb, who headed the Nasdaq Stock Exchange in the 1990s; and Paul Tagliabue, the former commissioner of the NFL. In all, the firm has about 400 employees, about a quarter of which are former regulators.
Promontory Financial is only one example of the way "revolving door" regulators collect their payoffs when they leave government.
So with Schapiro moving through the revolving door to collect her reward, White became SEC Chair after a softball confirmation process -- when the Senate had a Democratic majority. In March 2013, Bob Borosage wrote about White's confirmation hearing, in Mary Jo White at SEC: Watchdog or Lap Dog? The CEO Pay Test:
She and her husband, John White, are pristine examples about how to cash in on the revolving door between government service and private practice. After serving as a public prosecutor, White made millions defending top Wall Street banks and major companies at Debevoise and Plimpton. Recent clients included JPMorgan Chase on cases arising form the financial crisis, News Corporation over its phone hacking, former Bank of America CEO Ken Lewis on the shady parts of the bank’s takeover of Merrill Lynch. Not surprisingly, Jamie Dimon, the head of JPMorgan Chase, has hailed her as the “perfect choice” to head the SEC.
Also in March, 2013, Isaiah J. Poole wrote, in "A Low Bar Set For Mary Jo White At SEC Confirmation Hearing":
We were hoping that the Senate Banking Committee would give Mary Jo White, President Obama’s choice to be chairman of the Securities and Exchange Commission, a tough grilling at today’s confirmation hearing. What we got most often instead looked more like a friendly backyard grill party.
Among the many things White has done to undermine the agency's regulatory role are blocking the agency from requiring corporations to disclose to shareholders their spending on political activity, and long-delaying a rules requiring corporations to disclose the ratio of pay difference between top executives and regular employees.
We Told You So
OurFuture.org has been on this for some time. Here are some – just some – of the posts demanding that the SEC do its job:
● March 2012: "Tell The SEC To Make Corporations Reveal Their Political Donations."
● April 2013: "CEO Pay And SEC Delay":
Section 953(b) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act requires public companies to disclose the median annual total compensation of all employees, the total annual compensation of the chief executive officer, and the ratio of the median employee pay to the CEO’s pay. But years later the regulations still are not written so the disclosure still does not happen.
Wall Street’s strategy is to capture regulators, delay, delay, fund Republicans, fund Republicans, and maybe it will never happen. So far this is the case.
● November 2013: "While Swiss Limit CEO Pay, We Can't Even Enforce Our Pay Laws":
This law passed in 2010 but still is not in effect. Under this law all that companies have to do is disclose the ratio. But we can’t even get this law — yes it is the law — to take effect.
● From the April 2014 post: "CEO Pay Soars As Worker Pay Stagnates":
The Never-Appearing SEC Pay Ratio Rule
The 2010 Dodd-Frank Wall Street reform legislation required the Securities and Exchange Commission (SEC) to come up with a rule requiring companies to disclose the ratio of CEO compensation to worker compensation. The SEC dragged its feet through 2010, and then it dragged its feet through 2011, and then it dragged its feet through 2012, and then it dragged its feet through 2013, and then in September the SEC belatedly proposed a rule. Seven months later they are still dragging their feet on implementing this rule.
● September 2014: Why Is SEC Sitting On Corporate Transparency Rules?
● September 2014, Richard Eskow: 5 Reasons The SEC’s Executive-Pay Rules Matter – And 5 Ways to Use Them
● November 2014: We’ve Been Waiting Too Long For Those CEO Pay Rules From The SEC
● February 2015: Is The SEC Defying Dodd-Frank Law On Pay-Ratio Rule?
● March 2015: SEC Still Allowing Corporations To Hide Campaign Funding
● June 2015, Robert Borosage: Warren to SEC Chair: “Step Up” (Or Step Down)
● July 2015, Cormac Close: Cheaters Never Win … Unless the SEC Lets Them
● July 2015, Cormac Close: SEC Still Drags Its Feet 5 Years Later on Dodd-Frank Pay Ratio Rule
But wait, there's more:
● February 2016: Is Clinton Bought By Wall Street? There Is A Test For That
Right now, Clinton can demand that President Obama issue an executive order requiring corporations that do business with the federal government to disclose their political spending. Right now. they should disclose contributions to candidate super PACs as well as “dark money” groups, “think tanks,” even so-called “charities” that actually support candidates, ideologies and causes. All of it. Right now.
Clinton can also demand that the Securities and Exchange Commission (SEC) do the same for all public corporations it oversees. Make them disclose contributions to candidate super PACS, as well as “dark money” groups, “think tanks,” even so-called “charities” that actually support candidates and ideologies. All of it. Right now.
Warren is right to ask for White's removal as chair. President Obama can give the country a parting gift by making an example of White, and perhaps other moves to finally regulate Wall Street. Perhaps even a prosecution or two of the executives at that bank that defrauded 2 million customers by opening unwanted accounts and charging fees?