Lehman Anniversary: A Reminder That the SEC Needs Someone a Lot Better Than Mary Jo White as Chairman

Yves here. We’ve written regularly about the pathetic performance of Mary Jo White as SEC chairman. She was ballyhooed as a former effective prosecutor who could rebuild the agency. Here is a partial list of our stories on her tenure:

Time to “Fire” Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Former Firm, Debevoise

Elizabeth Warren Declares War on SEC Chairman Mary Jo White

Three Former SEC Commissioners Urge Mary Jo White to Stop Protecting Corporate Cronyism via Inaction on Disclosure of Political Spending

The SEC’s Mary Jo White: A Failure, or Doing Her Real Job?

The SEC’s Mary Jo White Punts on High Frequency Trading and Abandons Securities Act of 1934

Mary Jo White Institutionalizes Deutsche Bank Protection Racket at the SEC

More and more activist groups are demanding that Mary Jo White be replaced, pronto. Note that while Obama can’t fire her, insiders think that asking her to resign would do the trick. Tomorrow we’re escalating our campaign calling on President Obama to replace Mary Jo White with a mobile billboard truck that will be circling DC for the next three days. I hope you’ll support this effort by circulating this post (best of all to your Senators and Congressman, contact information here and here), linking to it on your Facebook page, and tweeting it.

By Becky Bond, CREDO Vice President and Political Director

The collapse of Lehman Brothers seven years ago today was the signature moment in a financial crash brought on by recklessness, greed, and outright fraud. Every year since, the anniversary of the Lehman collapse has offered us the opportunity to ask whether we have learned this lesson.

In the case of Securities and Exchange Commission (SEC) Chair Mary Jo White, the answer is clearly, “no.” Today, Mary Jo White represents a pre-Lehman mentality of deference to Wall Street – and it is long past time for her to go.

In an era when we need strong regulators reining in corrupt and out-of-control companies, White’s SEC is most famous for its dysfunction and for granting “get out of jail free” waivers to criminal banks.

The Project on Government Oversight (POGO), a respected government watchdog group, recently sent a letter to President Obama requesting that he ask Mary Jo White to step down as chair of the SEC, and designate a new head of the agency. As POGO put it, “White’s views have often aligned with those of her former Wall Street clients.” Sen. Elizabeth Warren penned White a scathing letter expressing deep disappointment and accusing the SEC chair of deliberately misleading her in a meeting.

The revolving door between Wall Street and government has once again produced a regulator who serves the interests of financial institutions, not everyday Americans.

The Securities and Exchange Commission under White’s leadership has settled the majority of its cases without requiring companies to admit guilt. Her track record better resembles the Mary Jo White who encouraged prosecutors to “moderate” their enforcement actions than the Mary Jo White who in her confirmation hearings promised to secure admissions of guilt.

The SEC has also become broken and dysfunctional, with White’s office known as “the cheese cellar: It’s where policy goes to age.” White’s history as a Wall Street defense attorney, and her husband’s current job as a corporate lawyer, has led to a frequent need to recuse herself from scores of cases. With only five voting commissioners, her multiple recusals result in gridlock and lighter punishments for corporate wrongdoing.

White’s whole-hearted embrace of the revolving door includes multiple former bank executives working as high-level SEC officials. She recently hired the former general counsel of Goldman Sachs, Andrew “Buddy” Donohue, for the influential role of her chief of staff.

Perhaps most gallingly, White’s SEC has routinely and automatically granted waivers to allow corporations that have admitted to criminal violations to keep their “trusted” status as issuers of securities and guardians of investments. She has frequently quarrelled with Commissioner Kara Stein, who objects to these “get out of jail free” waivers, and reportedly pushed President Obama to nominate a new SEC commissioner who might “dilute” Stein’s influence.

Mary Jo White may not have learned from the financial crash. But we have. That is why more than 116,000 CREDO members have called on President Obama to replace Mary Jo White, and nearly 100,000 have called on the president to replace retiring commissioner Luis Aguilar with someone like Kara Stein. It is why hundreds have called the White House and the SEC demanding change.

It is also why, this week, a mobile billboard is shuttling back and forth between the headquarters of the Securities and Exchange Commission and the White House with a clear, unequivocal message: It is time for Mary Jo White to go.

Seven years after Lehman Brothers, Americans have not forgotten, nor completely recovered. If President Obama wants to show that he has learned the lesson of that crash, then he has no choice. He must ask Mary Jo White to step down – and nominate a tough reformer in her place.

Print Friendly, PDF & Email


  1. washunate

    I’m all for calling out corrupt officials in regulatory agencies.

    But doesn’t this problem start at the top? This post from CREDO sounds more like an apologia for Obama than anything else. I think the main lesson Obama (and all the corporate Dems) have learned from the financial crisis and GWOT is that educated Democrats won’t hold them accountable for anything, even the most egregious bailouts and lack of prosecution by DOJ of the most heinous financial frauds and war crimes.

    I also find it interesting that Lehman has become the anniversary of note. That strikes me as sweeping aside the fact that the crash started long before that. NBER’s recession dating and the government’s GFC bailouts both started in 2007, and more generally, the 2007-2009 crisis was just a continuation of the longer term crisis that had been running for many years. To me, what Lehman signifies is when the intellectual class could no longer avoid talking about how bad things had become. Even the FBI had been talking about an epidemic of fraud by the mid 2000s. That’s why the Bush Administration transferred personnel to terrorism – to take them off white collar crime. Much of the initial financial merging and legislative changes were started in the 1990s. As were LTCM and the Committee to Save the World.

    If we’re going to mark an anniversary, maybe NAFTA, DMCA, or FSMA would provide a more comprehensive starting point. Or at minimum the Patriot Act.

    1. tegnost

      Or maybe the powell memo…Lifted this comment from the june 17 post
      June 17, 2015 at 4:34 pm
      Sorry, the old “If the Czar only knew” chestnut is not going to fly.

      Bottom line: Obama appointed this crop of people “rife with glad-handed sycophants of weak character” because he wanted just this sort of person in those staff positions making just these sorts of recommendations for positions of responsibility in the government/regulatory structures. I mean, in what other fashion could he ingratiate himself more effectively to the people from whom he looks to receive after the fact payoffs following his term in office?

      Obama is one of these people himself, and a narcissist to boot. So why in the world would he not want to create a staff that mirrored and acted upon his own shoddy, self-serving values.

      In his role as Grifter In Chief, I have come to expect no motivations or any outcomes achieved by this man that are not fully explicable by pervasive corruption.

      1. washunate

        Agreed, we can go back quite a bit further than the 1990s for context. I mean this whole thing since the collapse of the London Gold Pool is basically one big make-it-up-as-we-go experiment. Are we for state socialism, or not? Do we want to rule the world, or not? Our leadership class doesn’t seem to have any large vision; they’re like pick pockets passing through.

        I do think the 1990s are a notable inflection point setting up the specifics for how the GFC would unfold that were not obvious outcomes of the Powell memo and the early collapse of Bretton Woods. Powell’s vaunted US Chamber of Commerce – that defender of free enterprise – wrote a glorious socialist screed during the GFC about the need for the government to save the world.

        This is obviously drifting a bit from the SEC specifically, but I think it’s right in line with what the post is presenting. It is trying to draw a distinction pre- and post-Lehman without offering proof that a mentality of deference has actually changed.

    2. Vatch

      I think it’s good to use multiple anniversaries as base points for advocating change. In addition to Lehman’s bankruptcy on Sept. 15, we can use these:

      January 11 (2008): Bank of America agrees to buy the decrepit Countrywide Financial Corp.
      March 14 (2008): The NY Fed provided $25 billion to Bear Stearns. 2 days later, JP Morgan Chase agreed to merge with them.
      March 17 (2009): AIG announced $160 million in executive bonuses, despite the bailout a few months earlier.
      April 23 (2013): A flash crash.
      May 6 (2010): A flash crash.
      Sept. 23 (1998): the bailout of Long-Term Capital Management.
      December 2 (2001): Enron bankruptcy.

      Just about every month has an anniversary of financial misregulation. Let’s use ’em!

      1. washunate

        Yeah, there are quite a few. Just using Enron examples makes a fun list:

        1992: CFTC exempts Enron from futures contract trading regulation
        1993: SEC exempts Enron from the Public Utility Holding Company Act
        1997: SEC exempts Enron from the Investment Company Act
        1998: PWG members move to isolate CFTC chair Born’s efforts to regulate derivatives
        2000: CFMA exempts OTC derivatives from both CFTC and SEC regulation

        What cracks me up is apparently the CFTC and the SEC weren’t friendly enough with their exemptions so the entire concept of regulating derivatives had to be eliminated.

    3. Steven D.


      The president of the United States at this time happens to be Barack Obama. He’s the only one with any authority to influence this situation. When Elizabeth Warren was campaigning against Antonio Weiss, was she in actuality just doing Obama’s bidding?

  2. JTMcPhee

    “campaign to replace Mary Jo White with a mobile billboard truck circling DC…” “ONION” story or just fortuitous fun with syntax? You decide! Seems like an improvement in the quality of the placeholder.

    1. Vatch

      Thanks for a good laugh! I admit it took me a few seconds to understand the ambiguity; I agree that the truck would be an improvement!

  3. griffen

    Yes, break out the band. Richard Fuld still managed to hold to much of his fortune, to the best of my knowledge. I do wonder if he still wonders about not receiving the Bernanke/Paulson/Geithner absolution of a bailout.

    I think, generally, that of above-average wealthy Americans have recovered, to the extent this date isn’t marked with infamy as it should be. Especially those in the very industry from whence the disaster first emanated forth. Recovery works best when those pesky asset values have a floor.

    1. craazyboy

      America went from a little under 1000 billionaires pre-crash to around 1400 today. That’s way better than “recover”!

  4. JustAnObserver

    Remind me: Which white shoe law firm is keeping Mary-Jo’s plush corner office ready & waiting for her return ?

  5. Oldeguy

    Super example of why NC in general, and Yves in particular, are such treasures.
    There is a great divide in this country between those who rely on television for their news and those who rely on Internet sites such as NC.
    I have dearly loved family members who are Fox News devotees and will volunteer routinely the most bizarre drivel ( e.g. Obama is a foreign born White hating Muslim ) as if it were an explanation for what ails our country. When I fail to rise to the bait, and merely reply ” you don’t know the half of it “, they are puzzled- the expected partisan Dem MSNBC talking points would, of course, be far too self serving and superficial.
    Alan Greenspan, well known unindicted co-conspirator, said the 2008 debacle had taught him that markets do not self regulate. Given the painfully obvious regulatory capture spawned by the revolving door, we are still at the mercy of “self regulating” markets.
    Thanks again, Yves.

  6. alex morfesis

    replace the revolving door with a catapult…maybe we should bring in curly to replace moe…

    just make sure you have “3 blind mice” playing in the background as the moving billboard drives around dc…

Comments are closed.