Republican Could Replace White as SEC Head
Mary Jo White, head of the U.S. Securities and Exchange Commission (SEC), is set to resign her position in January as the new administration takes control.
Her departure would likely clear the way for a pro-Wall Street, anti-regulation replacement, which in turn would change the agency’s overall direction. (Source: “SEC Chairman White to Leave Agency, Opening Door to Conservative Shift,” The Wall Street Journal, November 14, 2016.)
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During White’s tenure, the agency was relatively combative with Wall Street, pursuing it on charges related to mortgage fraud, flash crashes, and—most recently—the opening of unauthorized accounts at Wells Fargo & Co (NYSE:WFC). The SEC has also helped implement the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
Dodd-Frank was a financial reform package spearheaded by Senator Chris Dodd and Representative Barney Frank, and championed by President Barack Obama. It was supposed to curb the excessive risk-taking activities that would lead to a repeat of the 2008 financial crisis.
Mary Jo White was responsible for a record number of enforcement cases, including high-profile cases against Blackstone Group LP (NYSE:BX) and Apollo Global Management LLC (NYSE:APO). One of White’s pet issues was the abuse of financial reporting standards, including the malleability of the adjusted earnings metric.
Without Mary Jo White at the helm of the SEC, analysts suspect that Republicans will roll back many of the regulations that restrain banking activities. President-elect Donald Trump has already said that his administration will “dismantle” Dodd-Frank so that banks can start lending once more.
Trump could even pare back White’s rules on mutual funds using too many derivatives, algorithmic trading activity, or the rules that govern the murky swamps of dark pools.
Moreover, once Mary Jo White leaves the agency, the Securities and Exchange Commission will only have two of the five commissioners needed to operate responsibly. Republican opposition prevented President Obama from filling the empty SEC seats, but President Trump may have better luck.
Trump’s party currently controls both branches of Congress, meaning there are fewer hurdles for him to clear. Although there is no word from the Trump administration on whom Donald Trump would like to see fill the position, their point man for financial regulation is Paul Atkins, a former SEC chair.
Since Trump is known for his critical stance on financial regulation, analysts are assuming that those views will be mirrored by the candidate chosen to replace Mary Jo White.
