President Barack Obama has officially nominated Mary Jo White to be the next head of the Securities and Exchange Commission. There is speculation that Obama chose White because he wanted someone that was going to be tough on Wall Street. The only issue is that Mary Jo White has a huge web of past connections to big banks that might make her task challenging.
Currently, White is the head of litigation at Debevoise & Plimpton, a private law firm; but as of Thursday, she will be one of the few females on the Obama team. Over the course of his first term, the president has slammed investment bankers for their role in the financial crisis and the recession that resulted from the process. Appointing White to the head of the SEC seems to be a defining decision in his presidency regarding financial regulation. According to Money Morning, the president said that “she helped prosecute white-collar criminals and money launderers. In the early 1990s, she brought down John Gotti.” Gotti was the head of the Gambino family crime organization. What has she been doing since then? The question that comes to mind for those keeping score is whether she really is the best candidate for the position.
According to the records, it’s been the exact opposite. For the last decade, White has been a defense attorney at Debevoise & Plimpton, where a large portion of her clients have been connected to large banks like Bank of America, JP Morgan Chase and Goldman Sachs. The choice to put White at the head of the SEC suggests that the President sees the establishment as an enforcer, but others find this thought to be misguided. Many people believe that the SEC needs to focus on its role as a regulator instead of an enforcer. If that is the case, White can spend the majority of her time restructuring the American Capital Markets and finding a way to translate that vision into rules that are required under the mess that is Dodd-Frank.
White’s responsibilities with the SEC will make a conflict of interest nightmare. Time will tell if she can avoid these situations, but the pessimist would say that it is a problem that is too difficult to avoid in such a high-profile position. The web of connections alone create a plethora of conflict-of-interest violations. Even her husband creates issues for the new head of the SEC. As a partner at the corporate law firm Cravath, Swalne & Moore, the Federal Ethics rules prevent her from participating in any matter that is connected to a client of her husband’s. So with all of these hurdles and scenarios for disaster, White has still accepted the nomination. The track records of her predecessors show that her chances of success are small, but many are relying on her success in this role.
Information from The Economist and Money Morning was used in this report.