Wall Street's Top Cop, Mary Jo White, Under Fire
WHY YOU SHOULD CARE
Keeping securities markets honest is critical for everyone’s well-being.
By Steven Butler
During the annual Cherry Blossom Festival in the nation’s capital this year, another kind of colorful display adorned Washington’s rail terminus at Union Station, strategically placed to catch the eye of employees as they arrived at the adjoining office building of the Securities and Exchange Commission. Campaigners against so-called “dark money” — secret corporate political donations — had plastered the station with multicolored cartoon ads depicting an epic struggle, claiming the government had been taken hostage and calling for a new superhero to save the day. “Mary Jo White can stop them!” screamed frightened citizens.
But the campaign also asked: “Where is Mary Jo White?” It’s been two years since President Barack Obama appointed the SEC chair to head the most important government agency responsible for policing securities markets and protecting investors, though many are still waiting for this legendary tough lawyer and prosecutor to make her mark. The cartoon campaign, for its part, pushes White to follow through on what she promised during her confirmation hearings in Congress, when she said she’d enact a rule requiring corporations to disclose political contributions to keep company owners — shareholders — informed. (White hasn’t enacted the rule yet and didn’t respond to an interview request.)
Sen. Elizabeth Warren sent White a letter in June blasting her for an “extremely disappointing” job performance.
White’s arrival at the 35,000-strong SEC was greeted with a kind of collective relief after she sailed through the Senate confirmation in 2013 in unanimous consent. She arrived amid heightened concern about corporate misbehavior, still fresh in people’s minds following the 2008 financial crisis, and a mixed record of the SEC policing its beat. Obama duly warned corporate crooks when he nominated her: “You don’t want to mess with Mary Jo.”
Indeed, White has proposed or enacted 30 substantive rules, and last year she filed a record number of enforcement actions — 755 — while obtaining $4.16 billion in settlements, another record. She first earned her crime-fighting reputation as a relentlessly aggressive prosecutor when she served from 1993 to 2002 as U.S. attorney at the Southern District of New York, widely considered the most prominent prosecutorial position in the nation. She was the first woman to hold the position, where she took down the likes of mafia boss John Gotti and World Trade Center bomber Ramzi Yousef. Still, she didn’t bust everyone. “She was tough in prosecuting terrorists, but she was never tough in prosecuting Wall Street,” says Kurt Walters, campaign manager at Rootstrikers, a political action group.
In person, the Missouri native is a diminutive physical presence — she stands roughly 5 feet tall. With her round face, which reflects her age of 67, and a plain hair style (almost a bowl cut interrupted by a slight part and a wave), White’s said to sleep very little, sometimes answering emails in the dead of the night. The avid runner and tennis player has long lived in a family of lawyers, including her grandfather, father, husband and son. And her doggedness got her ahead in the world of corporate law, most recently as head of litigation at Debevoise & Plimpton, a prominent New York law firm.
Throughout her career she has moved seamlessly from a world where she’s been paid to defend (alleged) corporate bad guys to another where she’s paid to go after them, making her an active participant and operator of the revolving door between Wall Street and the nexus of agencies that police and regulate Wall Street. As the SEC’s responsibilities have exploded with new rule-making requirements under Dodd-Frank legislation, perhaps an inside expert really is needed for this kind of job.
Not everyone agrees. “If somebody is to say that the only person to run the Environmental Protection Agency is a former coal or oil executive, they’d be laughed out of town,” says Walters, whose political action group recently issued a report outlining what it believes are extensive conflicts of interest that compromise White’s performance. The SEC has indicated that it’s focusing on rules mandated by Dodd-Frank before working on corporate disclosure, but Lisa Gilbert, director of Congress Watch at the advocacy group Public Citizen, says, “We believe the agency can walk and chew gum at the same time.”
Frustration with White’s perceived slowness to act and leniency toward corporate wrongdoers boiled over in June when Democratic Sen. Elizabeth Warren sent White a 13-page letter blasting her for an “extremely disappointing” job performance. Among other issues, Warren lit into White over her unfulfilled promise to force disclosure of corporate political contributions, and the allegedly low 4 percent rate at which corporations admitted guilt as part of SEC settlements over alleged rule-breaking. (Warren didn’t respond to a request for comment.) Meanwhile, Credo Action, a left-leaning political action group, says it’s gathered more than 100,000 signatures calling for Obama to remove White as SEC chair.
The White House spoke out in her defense, and four former SEC chairs — both Republican and Democratic — wrote to The Wall Street Journal, praising White’s leadership and noting that Warren didn’t understand how the SEC worked. They pointed out, for example, that the low guilty admission rate reflected the use of a new and powerful tool that’s arguably most effective when used judiciously. And while Warren complained that White’s effectiveness had been compromised by 50 or so cases where she had to recuse herself because the cases involved former clients of hers or her husband’s, that was fully disclosed before her Senate confirmation — which Warren also endorsed.