Obama names Mary Jo White to lead SEC, renominates Cordray
WASHINGTON — In nominating former federal prosecutor Mary Jo White to head the Securities and Exchange Commission, President Obama aimed a strong message at potential Wall Street miscreants: Watch out.
Obama amplified that decision Thursday by renominating Richard Cordray, a former state attorney general, as director of the Consumer Financial Protection Bureau. Cordray’s controversial recess appointment to the 2-year-old agency expires at the end of the year.
Obama said that White and Cordray were key to implementing the 2010 overhaul of financial regulations and protecting consumers and the financial system from the “kinds of abuse that nearly brought the economy to its knees.”
“But it’s not enough to change the law,” Obama said in announcing the nominations at the White House, flanked by White and Cordray. “We also need cops on the beat to enforce the law.”
His administration has faced criticism for not being more aggressive in holding bankers and other executives accountable for their actions leading up to the financial crisis. In White, Obama has someone with a long track record of successfully going after wrongdoers.
“You don’t want to mess with Mary Jo,” Obama said.
If confirmed, White would be the first former prosecutor to lead the SEC. The job normally goes to securities lawyers, regulators or politicians.
She would be the permanent replacement for Mary L. Schapiro, who stepped down as SEC chairwoman in December. Obama had temporarily elevated SEC Commissioner Elisse Walter to the agency’s top position.
White, 65, brings an impressive enforcement resume. She was the first woman to hold the prestigious position of U.S. attorney for the Southern District of New York, with an office only blocks from Wall Street.
In that job from 1993 to 2002, she prosecuted insider traders, drug traffickers and terrorists, including those involved in the 1993 World Trade Center attack and the 1998 bombings of two U.S. embassies in Africa.
“She is a tough, experienced prosecutor, which is exactly what the SEC needs right now to restore investor confidence,” New York Atty. Gen. Eric T. Schneiderman said.
Jonathan Corpina, senior managing partner of Meridian Equity Partners, welcomed tougher enforcement.
“When you get the bad eggs out, that’s positive for any industry,” said Corpina, who also is a trader on the floor of the New York Stock Exchange. “Main Street has an image of Wall Street that needs to be cleaner.”
White has spent the last decade in private practice, defending companies and executives accused of white-collar crime or securities law violations. Among her clients at Debevoise & Plimpton law firm in Manhattan was former Bank of America Corp. Chief Executive Ken Lewis.
She explained her philosophy last year at a New York University forum, titled “Did felons get a free pass in the financial crisis?”
“You should be aggressive where there is crime, but what you should not do … is fail to distinguish between what is actually criminal and what is just mistaken behavior, what is even reckless risk-taking, and not bow to the frenzy,” she said.
Barbara Roper, director of investor protection for the Consumer Federation of America, said she hoped White’s time as a defense lawyer hadn’t softened her views on financial wrongdoing.
“She has a reputation for being a very smart and aggressive prosecutor. She similarly has a reputation for being a smart and aggressive defense attorney,” Roper said. “The hope is she will bring those same qualities to her new job as the head of the SEC and set aside that defense attorney mentality and embraces the role of regulator.”
White said Thursday that she looked forward to working to fulfill the agency’s mission “to protect investors and to ensure the strength, efficiency and the transparency of our capital markets.”
White has served as a director of the Nasdaq stock exchange but does not have a deep background in financial regulation. Analysts said that could be a hindrance as the SEC works to complete complex new rules on financial derivatives, credit rating companies and initial public stock offerings.
“She’s pretty much a blank slate on many of the leading issues now before the SEC,” said John Coffee, securities law expert at Columbia University in New York. “She’s a bit of a wild card.”
Still, Sen. Charles E. Schumer (D-N.Y.) predicted White would be easily confirmed by the Senate.
“Mary Jo White is a fearless, tough-as-nails prosecutor with the knowledge of industry to keep up with the markets’ swift innovation,” he said.
Cordray’s nomination could be more problematic. His current appointment is set to expire at the end of the year, and Obama’s decision to renominate him is likely to trigger a battle with Senate Republicans.
Cordray, 53, was placed at the helm of the agency a year ago in a recess appointment, avoiding the need for Senate approval, after nearly all Senate Republicans vowed to block anyone picked to head the agency unless changes were made to reduce its power.
“Financial institutions have plenty of lobbyists looking out for their interests,” Obama said Thursday. “The American people need Richard to keep standing up for them. And there’s absolutely no excuse for the Senate to wait any longer to confirm him.”
The recess appointment infuriated Republicans and spawned a lawsuit by a Texas bank and two free-market advocacy groups claiming it was unconstitutional because the Senate was not in a formal recess. The suit is pending.
Republicans have complained that the consumer bureau, created by the 2010 law, concentrates too much power in a single director. The opposition to Cordray was led by Sen. Richard Shelby (R-Ala.), and his views have not changed, said Jonathan Graffeo, a spokesman for Shelby.
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