Mary Jo White, confirmed April 8 as President Barack Obama’s choice for chair of the Securities and Exchange Commission (SEC), has a wealth of experience — and a pile of wealth. From 2002 to 2013, White was the head of litigation at Debevoise & Plimpton, where her clients included the likes of UBS, JPMorgan Chase and Morgan Stanley. Servicing the legal needs of bankers has been good to White and her husband John, also a partner of an industry-friendly firm. Bloomberg reports the Whites’ financial disclosure forms show they own “assets valued between $9.9 million and $41 million.”
In March, White’s nomination sailed through the Senate Banking Committee 21 to one. Lone dissenter Sen. Sherrod Brown (D‑Ohio) voiced concern about “Washington’s long-held bias toward Wall Street and its inability to find watchdogs outside of the very industry that they are meant to police.”
When nominating White, Obama promised that she will be a “cop on the beat.” Yeah, but who on her beat will she “serve and protect”?
Ka-ching! Now we know.
On May 1, in her first SEC vote, White shepherded through a proposal that would allow foreign branches of American banks to ignore DoddFrank financial reform regulations that control the $700 trillion derivatives market. Instead, U.S. banks would be free to trade derivatives under the rules of host countries where regulations are weak or nonexistent.
Been there. Done that. The Financial Crisis Inquiry Commission, which investigated the 2008 financial crisis, concluded: “The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter derivatives was a key turning point in the march toward the financial crisis.”
In a May 5 editorial, the New York Times lamented the fact that White’s first act as SEC chair “could leave investors and taxpayers exposed to the ravages of reckless bank trading.” Indeed, out-of-control bankers pose a clear and present danger. As Attorney General Eric H. Holder Jr. explained on March 6, the Justice Department may choose not to pursue cases against big banks because filing criminal charges could “have a negative impact on the national economy.”
To that end, Sen. Bernie Sanders (I‑Vt.) and Rep. Brad Sherman (D‑Calif.) have introduced legislation that would give the Treasury Department 90 days to identify commercial banks, investment banks, hedge funds and insurance companies whose “failure would have a catastrophic effect on the stability of either the financial system or the United States economy.” Treasury would then be required to break up those institutions.
“We have a situation now where Wall Street banks are not only too big to fail, they are too big to jail,” Sanders said in announcing the legislation. “No single financial institution should have holdings so extensive that its failure could send the world economy into crisis. … If an institution is too big to fail, it is too big to exist.”
White’s SEC lacks the regulatory backbone to protect the public from financial schemers. It behooves citizens to get behind the SandersSherman bill and break the banking industry into units small enough so that if one were to fail, it would be but a fart in the wind.
Joel Bleifuss, a former director of the Peace Studies Program at the University of Missouri-Columbia, is the editor & publisher of In These Times, where he has worked since October 1986.