These Activists Are Making Life Miserable for SEC, Wall Streetby
Progressives use tweets, e-mails in campaign against regulator
Group hires `dump truck' to push for SEC Chair White's removal
Kurt Walters, a 26-year-old with a hipster beard and a resume that features a stint as digital press secretary in a Senate race in Hawaii, has made an unusual career turn: He’s helping lead a grassroots assault on Wall Street’s top regulator.
And though he may not know the intricacies of the securities laws, Walters, the campaign manager of a group called Rootstrikers, has some tools that polished bank lobbyists lack. They include an e-mail list numbering in the millions, social-media savvy and a willingness to publicly shame the head of the U.S. Securities and Exchange Commission.
Driving Walters and his counterparts at other progressive groups is outrage over what they believe to be excessive coziness between the SEC and the companies it polices. Using blast e-mails, caustic websites, tweets and even a bit of street theater, the organizations have enticed 1,500 people to call the White House demanding that SEC Chair Mary Jo White be replaced. Many had probably never heard of her until recently.
“Anybody who cares about effective rules on Wall Street kind of got burned in 2013 with the appointment of Mary Jo White,” Walters said. “This is how ordinary people are able to be a counterweight to concentrated power.”
Aside from wanting the SEC to force companies to disclose their political spending, a controversial proposal opposed by many Republicans and corporations, the activists have few concrete policy goals. Still, the unprecedented outcry has produced results, prompting the agency to approve a long-delayed rule on executive pay and scuttling one of White’s preferred picks to be a Democratic commissioner.
A spokeswoman for White declined to comment. Her supporters say she has accomplished a great deal and attribute some of the criticism to political pressure from an emboldened anti-Wall Street wing of the Democratic party. Under White, the agency has brought more than 1,800 enforcement actions and has adopted more than two dozen rules, including new regulations for money market mutual funds and additional oversight of credit rating companies.
Rootstrikers and the other anti-SEC groups with names like Credo Action and Democracy for America, arose from the netroots movement that married the Internet and progressive politics. The SEC is just one part of their agenda, which also includes issues ranging from campaign finance reform to climate change. While their massive e-mail databases can be a powerful lobbying weapon, critics say the groups often latch on to hot topics like bashing banks to help raise money for themselves, and then move on when public attention fades.
Some securities lawyers and ex-SEC officials also argue the attacks on the regulator are dangerously short-sighted and, in reality, could make the markets less safe by imposing a litmus test that results in appointees having scant knowledge about the firms they are supposed to oversee.
“How can it be that experience in the industry you are going to regulate disqualifies you?” asked Norm Champ, a former head of the SEC’s investment management division who is now lecturing at Harvard Law School. “If you want to find issues, if you want to find fraud, you need expertise.”
Inspiring the progressive army is a well-known scourge of Wall Street, Senator Elizabeth Warren. The campaign against the SEC and White began in earnest in June after the Massachusetts Democrat sent the SEC chief a 13-page letter that called her tenure “extremely disappointing.”
While the groups say they don’t expressly coordinate either with Warren or among themselves, they watch each other on social media to see what tactics gain traction and then jump in with a broadside of their own. A Credo petition to replace White “with someone who will stand up to Wall Street” has been signed by more than 115,000 people, a response that soared after Warren brought the issue to the fore, said Becky Bond, the group’s political director.
“Having 100,000 people sign a petition about a government official at the SEC that they have never heard of is pretty astounding,” she said.
Warren has helped in other ways as well, said Jeff Hauser, a lawyer who runs the Center for Effective Government’s Revolving Door Project. Her victories in two major confirmation fights proved progressives can wield influence in nominations, said Hauser, who is focused on getting regulators appointed who are skeptical of the industries they oversee.
The first came in 2013 when Warren and a handful of other senators effectively blocked President Barack Obama from nominating Lawrence Summers, the former head of the National Economic Council, to lead the Federal Reserve. Her opposition also prevented ex-Lazard Ltd. banker Antonio Weiss from getting confirmed to a high-level Treasury Department job this year.
White, a former U.S. attorney in New York, seems an unlikely target for so much vitriol. In announcing her nomination, Obama warned Wall Street, “you don’t want to mess with Mary Jo,” a nod to her time as a prosecutor bringing down mobsters and terrorists.
Her law-and-order reputation, however, has been questioned at the SEC. Democrats, including two of her fellow commissioners, have been bothered by White’s hesitance to tack on additional punishments to banks that settle cases. She has often voted to grant firms waivers from the extra sanctions.
Though arcane, the issue provided fodder for the progressives. Using online tools, Credo has arranged for more than 1,500 people to call SEC staff members directly and read a script that asks the agency to “immediately stop granting waivers to companies that break the law.”
The groups also sabotaged White’s favored choice to fill a soon-to-be vacant Democratic commissioner slot. While the selection of Washington attorney Keir Gumbs was meant to be a quiet affair, that changed when the activists discovered he had represented corporations that opposed SEC rules.
Quickly, an e-mail went out from Credo: “Tell President Obama: We need Securities and Exchange Commissioners who represent Main Street, not Wall Street.” Rootstrikers put up a website, www.nomorewallstreetinsiders.com, that generated more than 1,600 phone calls to the White House and SEC and 72,000 signatures on a petition.
The administration has since moved on to other candidates, according to people with knowledge of the matter who asked not to be named because the process isn’t public. Gumbs declined to comment.
Future nominees will get the same level of scrutiny, said the activists, who pledged to keep the pressure on White as well. That means more online petitions, more phone calls to the White House and a few stunts.
Last month, Credo hired a “Dump (Mary Jo) Truck,” to drive around Washington. A picture of a smiling White was plastered on the side, along with the logos of JPMorgan Chase & Co., Bank of America Corp. and other lenders. The caption read, “SEC Chair Mary Jo White Works For Banks, Not For You.”
Within a few hours, images of the truck driving past the White House and the Capitol were uploaded to the Internet, ready for tweeting.