Obama has rejected the Senator’s request, which may be more about how a potential Clinton administration will approach regulation.
U.S. Senator Elizabeth Warren (D-Mass.)
A lightning rod for the financial services industry, U.S. Senator Elizabeth Warren (D-Mass.), an outspoken critic of Wall Street, is taking on Mary Jo White again, and has asked the Obama White House to fire the head of the SEC because of Warren’s concerns about public companies disclosing political contributions.
In her recent letter to Obama, Warren asked the president to “use his unilateral authority to immediately designate another commissioner” to serve as head of the SEC.
Warren argues that White “has focused the agency’s limited resources on pursuing a voluntary ‘disclosure effectiveness initiative’ with the aim of reducing companies’ existing disclosure obligations, while neglecting to complete congressionally-mandated Dodd-Frank rules that would strengthen investor protections,” in a statement.
SEC Chair Mary Jo White
Over the past three years, White’s allegedly “anti-disclosure” views have “undermined the SEC, your Administration’s priorities, Congressional mandates, and the best interests of investors,” Warren wrote. “Under a new Chair, the agency can re-direct its limited discretionary resources away from actively undermining the interests of investors and back toward its core purposes,” Warren adds.
“I have tried both publicly and privately to persuade Chair White to direct the agency’s resources toward pressing matters of compelling interest to investors and the public, and toward completing those rules that Congress has required it to implement,” according to Warren. “But after years of fruitless efforts, it is clear that Chair White is set on her course.”
Citing as proof of support for her case against White, Warren notes that Congressional Democrats and the administration are “strongly opposing a Republican rider in recent government funding bills that would prevent the SEC from issuing a rule requiring public companies to disclose political contributions.”
In addition, Warren argues that White “herself has steadfastly refused to issue such a rule, despite overwhelming investor and public support for it,” according to a statement.
“Congressional Democrats will fight to remove the recently passed rider from December’s government funding legislation, and I urge you to threaten to veto any effort to extend this corrupt policy,” Warren says in her letter to Obama. “But these efforts will be meaningless as long as Chair White continues to control the agenda of the SEC.”
There has been initial negative response to Warren’s assertions.
The Obama administration is rejecting Warren’s request. “The president continues to believe that Chair [Mary Jo] White is the right leader for the Securities and Exchange Commission,” Eric Schultz, a spokesman for the Obama administration, told the press.
Senior industry analyst Anshuman Jaswal, PhD, who focuses on global financial services for the securities and investments group at market research firm Celent, says that Warren may not have enough evidence to call for White’s removal.
Anshuman Jaswal, senior analyst, Celent
“Senator Warren has very strong opinions in this and related SEC matters and is well within her rights to exercise them,” Jaswal says. “But targeting the SEC chief mainly due to inadequate rule-making for political donations might not be seen as sufficient grounds for the SEC Chairperson’s removal, especially if the President disagrees with such a demand. The Democrats are trying alternate means of bypassing U.S. Supreme Court’s Citizens United decision in the matter, or at least reducing its impact on political donations by companies.”
Overall, “the SEC chair’s record seems to be good, especially in the highly challenging economic circumstances within the U.S. and globally,” Jaswal says. “There will always be critics and detractors in such situations. While they may sometimes succeed in bringing about change, in this particular instance there doesn’t seem to be enough for the President to take any action.”
Other industry observers have suggested that Warren’s move is a sign that the Massachusetts Senator and other Progressives want to play key roles in the hiring and firing of financial services regulators that will be part of a future Hillary Clinton administration, if the Democrat wins the presidency next month.
“The idea that Ms. White is reducing public disclosures must be news to everyone now struggling to comply with new reporting rules on asset management, CEO pay ratios, conflict minerals, derivatives, and more,” according to an editorial published by The Wall Street Journal. “The Warren charge springs from the fact that, like every other person who has run the modern SEC, Ms. White has wondered if disclosures can be simplified to make it easier for investors to find the information they need. As for ignoring investor protection, the record shows that in the 12 months ending in September, the SEC brought more enforcement cases than in any other year in its history.”
Warren has attacked White before, citing “serious concerns” last year about the SEC Chair’s first two years at the helm. Warren described White’s tenure as “extremely disappointing,” and said that the agency is not “consistently and aggressively” enforcing securities law and is falling short in protecting investors and the public.
SEC officials decline to comment upon Warren’s latest letter.
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