Mary Jo White, President Barack Obama’s choice to run the U.S. Securities and Exchange Commission, told lawmakers that her work for Wall Street firms won’t affect her ability to be a zealous advocate for investors.
The scope of any conflicts of interest is “quite narrow” and would mostly affect SEC enforcement cases, White, 65, said today at a Senate Banking Committee hearing on her nomination. Her participation in writing regulations will be unaffected by her previous representation of clients such as JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), and UBS AG (UBSN) as a defense lawyer.
“The public investors should know I am their advocate,” White said. As a U.S. attorney from 1993 to 2002, “I was exceptionally aggressive against large institutions, CEOs and senior executive types,” she said.
White, who has said she would retire from New York-based Debevoise & Plimpton LLP if she’s confirmed, drew bipartisan support at the hearing before the Democrat-led panel. Senator Sherrod Brown, an Ohio Democrat, said last week he wasn’t ready to support White because of concerns over conflicts of interest.
“While I will have recusals, as many nominees, mine are not out of the ordinary in scope,” White said. “In general, I’m not recused from any SEC rulemaking or policy matters.”
Her record “leaves no doubt she will vigorously pursue the SEC’s enforcement agenda,” Schumer said in a statement introducing her to the committee.
White’s testimony followed recent warnings from Attorney General Eric Holder that the size of the largest financial institutions make it difficult to fully punish them for wrongdoing. She said in response to a question that the SEC considers the economic impact of penalties it seeks against companies, though those consequences aren’t considered a barrier to bringing a lawsuit.
“At the SEC, there is no institution too big to charge,” White said.
A top priority would be completing rules required by the Dodd-Frank Act of 2010 and last year’s Jumpstart Our Business Startups Act, White said. The SEC should consistently consider the economic costs and benefits of new rules “from the outset,” she wrote in her prepared remarks.
She mostly avoided forecasting her position on pending regulations, although she assured senators that the SEC, not the banking regulators who are members of the Financial Stability Oversight Council, should write new rules for money-market mutual funds. Regulators have debated how to limit the risk posed by some money funds since the September 2008 collapse of the $62.5 billion Reserve Primary Fund.
“I understand the systemic risk that is trying to be addressed by the discussions,” she said. “I am also acutely aware of the value of money-fund products. Whatever is done, we want to make sure that is not harmed by this.”
Questioned by Senator Bob Corker, a Tennessee Republican, White said she would immediately turn her “personal attention” to the Volcker rule, which prohibits proprietary trading by banks. White told Corker she was committed to what he called a “bright line” to distinguish among proprietary trading, hedging activities and market-making.
White was the focus of most attention at the hearing, where senators also questioned Richard Cordray, Obama’s nominee to be director of the Consumer Financial Protection Bureau. Republicans are blocking full Senate consideration of Cordray, looking to restructure the bureau’s leadership and gain oversight over its budget before voting on a permanent director.
Senate Republicans haven’t publicly expressed reservations about White’s nomination. The banking committee must approve White’s appointment before it moves to a full Senate vote.
Senator Tom Coburn, an Oklahoma Republican, said at today’s hearing he would “aggressively support” her to lead the SEC. Senator Mike Crapo of Idaho said after the hearing that he “would intend to support her.”
“You had a bipartisan group praising her and committing to vote for her nomination, so I think she’s going to sail through quite easily,” said Brian Gardner, senior vice president for Washington research at Keefe, Bruyette & Woods Inc.
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