Obama’s likely nomination of Mary Jo White to head the SEC is such a departure from his normal picks that it is enough to make me believe in the claims that he plays 11 dimensional chess. There must be more here than meets the eye.
Mary Jo White is an esteemed former prosecutor known for her independence and toughness. Colleagues who know the New York bar describe her as “universally respected”. Via e-mail, Neil Barofsky was enthusiastic about the idea that she’d be nominated.
One negative is the fact that Obama has decided to nominate someone serious as the statute of limitations on securities fraud for misdeeds during the crisis has pretty much expired and after the horrific Jumpstart Obama’s Bucket Shops Act is law. So White would shut the barn door after the horse is in the next county. Second is that she might have more recusals than one would like. She represented Bank of America’s Ken Lewis in a civil fraud suit (but since that was Lewis personally, that alone should not create an impediment with Bank of America cases). Her role as former board member of NASDAQ might be trickier. The biggest potential fly in the ointment on the conflicts side is that her husband, John White, who headed the SEC’s corporate finance section under Chris Cox and was heavily involved in detailed Sarbanes Oxley rulemaking, and now that he is back at Cravath, has been lobbying against regulation.
The 11 dimensional chess angle may be that the Republicans will fight any appointment if it comes before June. Per the Wall Street Journal:
Some observers predicted the White House would have difficulty getting any SEC nominee through the Senate until Republican Commissioner Troy Paredes’s term expires in June, possibly creating an opening for a Republican. Nominees can stand a better chance at confirmation if they are paired with a member of the opposing party. The SEC currently has one empty seat.
That would mean the agency could face gridlock, delaying votes on controversial issues such as the “Volcker rule,” which limits risk-taking at U.S. banks.
The last cynical theory I can come up with is that Obama regards the SEC as so unfixable that it doesn’t matter if he appoints a superwoman, his corporate backers will still face no risk, and he can still say he put a strong person in place, which is all he can do. If so, we’ll see if Mary Jo White can prove that assumption wrong.