“Hilariously Corrupt”: Former SEC Chairman Arthur Levitt Attacks Elizabeth Warren for Criticizing SEC Inaction; He Did Just That in 2015

Earlier this week, the Wall Street Journal published an op ed by Clinton-era SEC chairman Arthur Levitt, attacking Elizabeth Warren for allegedly undermining the SEC in doing its job by criticizing its chairman, Mary Jo White. Since Warren has been shellacking the agency for repeatedly failing to get out of bed, it’s hard to see her criticism as interfering with the SEC’s performance, since the agency appears to be getting not very much done to begin with. But you’d never get a clue as to how derelict the SEC has been in performing its duty rom the aggrieved tone of Levitt’s piece. Here’s his main beef:

But now, by her own actions, she risks undermining the Securities and Exchange Commission, the agency charged with protecting the investing public. She recently called for the dismissal of SEC Chairman Mary Jo White because Ms. White has chosen not to devise and enforce a rule that Sen. Warren favors—a rule that would require companies to disclose their political donations.

Now here is the priceless part: As you can clearly see from the letter embedded at the end of this post, Levitt himself engaged in precisely the same sort of behavior that he has now deemed to be utterly unacceptable when the likes of that pesky Elizabeth Warren does the same. You’ll see Arthur Levitt signed a missive that takes Mary Jo White to task for failing to implement a rule on public company disclosure on political donations. And not only did Levitt sign it, but so did another former SEC chairman, Bill Donaldson, and a former commissioner, Bevis Longstreth.

So get this: it’s OK for insiders to criticize other insiders as long at it’s a mere wet noodle lashing and goes nowhere, which is what a letter from former SEC commissioner has-beens amounts to. But God forbid someone who has actual power make demands.

Now admittedly, Warren has gone further than other critics of the SEC in calling for Mary Jo White’s ouster. But Warren has repeatedly asked for information and explanations from White for her failure to implement various rules, particularly ones mandated by Dodd Frank, where the agency is clearly well behind on delivering. And it’s not as if White has ever bothered giving the impression that she is dealing in good faith with Congress and with Warren in particular. White goes into unconvincing bureaucratic mumble-speak when grilled; as a former litigator you know she knows better (while Janet Yellen, who is an economist rather than a regulator by background, does a plausible job of playing deer in the headlights with Warren).

The other reason Levitt’s criticism is hypocritical is that he complains about Warren demoralizing the agency. Huh? It’s demoralizing to work for a body that doesn’t execute on its stated mission. As recently retired SEC staffer James Kidney described at some length, the SEC has many career employees who are dedicated to the idea of enforcing the law, and how he specifically was undermined in investigating Goldman’s CDO by political appointees like Robert Khuzami, the head of enforcement. As Kidney said in his widely-reported farewell speech:

For the powerful, we are at most a tollbooth on the bankster turnpike. We are a cost, not a serious expense…The system is broken.

Plus let’s get real. Mary Jo White is a lame duck. She will offer to resign to the incoming President. So no one at the SEC is going to take a further swipe at a chairman already regularly depicted in the press as ineffective as all that meaningful. Levitt would have been on better ground for criticizing Warren for grandstanding, which she is. The demand that White resign is to throw a marker down to the new President that Warren is prepared to go to war to get a better replacement.

So why is Levitt rushing in to try to protect White? Was he put up to it by members of Team Clinton, who are starting their range war over financial regulator appointments early? Or is Levitt in defending the SEC chairman’s supposed prerogative to pursue “a fixed agenda” even in the face of abject failure to enforce the law, because White has devoted inordinate amounts of time defending his pet bad idea, that of competition among exchanges?

Remember that Arthur Levitt came from the American Stock Exchange, and therefore wanted to strengthen the position of his former charge. He was responsible for Rule NMS, which gave us dark pools, high frequency trading, and the worst possible market structure. Every successive SEC commissioner has defended Rule NMS despite the fact that it has little to recommend it and lots not to like about it. And White has committed significant resources to data gathering exercises when many experts view them as excuses to defer action in the hope that the furor driven by Michael Lewis and other HFT critics died down.

Or perhaps we should just look for the obvious answer. As one reader who has done time inside the Beltway noted:

I’m confused. He was for it a year ago and now he’s against it cuz Hillary got a lotta $ from companies?


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  1. 1 Kings

    Warren has perfected the ‘SPEAK LOUDLY…(but never bring the stick.)’

    bring the smallest stick possible, wrap it with cushy protective gear, place it in an unused corner, put a Japanese screen around it, then leave the room to do a presser on how you’ve protected the American people.
    Oh, you knuckleheads…

    1. sgt_doom

      I agree, it is political-financial theater, plain and simple, and Levitt, who should be in jail, is afforded the opportunity to sound off by the Corporate NonMedia.

      And his pathetic phrase: ” . . . she risks undermining the Securities and Exchange Commission.”

      Un-frigging-believable — when the IG report showed one woman employee there, in the 6-figure salary bracket, who access porn sites 16,000 in a four-week period.

      Should shut it down, just like the FBI, and begin completely new.

    2. RepubAnon

      She’s a Senator – talking loudly and attracting buzz is the only way to get effective action. Pray tell, what “stick” would you have someone in the legislative branch bring? Propose a bill with no publicity that gets quietly dropped because nobody’s paying attention?

      It’d be different if Warren was running the Executive branch… but she’s not President.

      1. 1 Kings

        Excuse: When she proposes a bill to reinpose Glass-Steagall, repeal the Commod Futures Mod Act, and end back dating options, then I believe her ‘stick’.
        Until then, I’ll quote again a lady on Thom Hartman about Obama:”When someone SHOWS you who they are, believe them”.(emphasis added to hopefully enter the denial section of your brain).

    1. rich

      It’s going to get worse…………

      Larry Lindsey Silences CNBC: “The Most Dangerous Candidate Is The One The Media Is Paying The Least Attention To”

      Lindsey eloquently explains that “they are creating a bandwagon effect… it’s pretty clear what side the news media is on here and that is something that should worry markets after the election…

      If Mrs. Clinton becomes President, who will keep an eye on her, on the kinds of side-deals that may be happening, on the regulatory abuses…?”


      May not like the messenger but his point is valid. Who’s going to step up and ask the hard questions? Chris “Thanks for funding my wife’s campaign” Matthews, Wolf “I partied w/ my friends at the DNC” Blitzer, or George “I’m a Clinton Foundation Donor” Stephanopolous?

      1. RepubAnon

        The media is going to revert to the Clinton rules after the election – they’ll follow every fake scandal the Republicans propose. The sad thing is, the republicans invent so many fake scandals that it’s hard to take any real scandals seriously.

    2. DanB

      As one of her constituents, I consider Warren a hyper-animated illustration of psychological dissociation. This is quite common among “pragmatic progressives.”

    3. sgt_doom

      Me too? And I am still wondering if Catherine Mann, that faux economist shill, is her sister-in-law?????

    4. Pirmann

      Liddy Warren and Bernie Sanders are both all talk. They have proven to be such by their (in)actions. Sychophants. Our only hope at this point is Trump, who talks, backs it up, and doesn’t back down to the political elite.

  2. KnotRP

    So Levitt has blazed the career which Warren
    can emulate. It is so nice to see old timers
    mentoring the next generation!

  3. Teejay

    letter dropped out. : But you’d never get a clue as to how derelict the SEC has been in performing its duty [f]rom the aggrieved tone of Levitt’s piece.

  4. Oliver Budde

    Avuncular Art is a skillful and therefore dangerous two-faced liar. He is an advisor to Goldman Sachs and the Carlyle Group. He is a member of the CFR. He is on the Board at Bloomberg. And he is a member of that vile and depraved Wall Street secret society/fraternity known as Kappa Beta Phi (see the NY Mag article of a few years back for more). Investor’s advocate my ass.

  5. OpenThePodBayDoorsHAL

    The guy with the whip will continue to flog the slaves in the galley until they revolt, until then he’ll just tell the guy with the drum to beat faster. Where’s Spartacus?
    Reg NMS, FASB 157, the ACA, the TPP…the whip has different and confusing names these days but it’s all the same idea.
    People of the world unite, you have nothing to lose but your chains.

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