Will America finally get justice for crimes on Wall Street? We think not. Today, President Barack Obama named Mary Jo White to head the Securities and Exchange Commission. The White House and most of the press are touting her credentials as a former New York Southern District prosecutor. From the White House press briefing:
Mary Jo White -- for those of us, as you were, here in the ‘90s, know of her extraordinary record as a U.S. attorney in the Southern District of New York. I mean, she prosecuted a number of large-scale white-collar crimes in complex securities and financial institution fraud. She brought justice to the terrorists responsible for the bombing of the World Trade Center and for the bombing of American embassies in Africa. She also served as a director of the Nasdaq Stock Exchange. As you know, the SEC plays an essential role in the implementation of Wall Street reform and rooting out reckless behavior in the financial industry. The President believes that that appointment and the other one -- the re-nomination he’s making today -- demonstrate the commitment that he has to carrying out Wall Street reform, making sure that we have the rules of the road that are necessary and that are being enforced in a way that ensures we don't have the kind of financial crisis that we had that led to the worst economic crisis that we've seen since the Great Depression.
Sounds good right? Uh, not so fast. If one even bothers to read White's bio from her current law firm Debevoise & Plimpton LLP, they would find she has been getting Wall Street off the hook for a decade.
Ms. White’s practice concentrates on internal investigations and defense of companies and individuals accused by the government of involvement in white collar corporate crime or Securities and Exchange Commission (SEC) and civil securities law violations, and on other major business litigation disputes and crises. For her criminal work, she leads a Debevoise team that includes eleven former Assistant U.S. Attorneys with extensive experience in major commercial investigations and prosecutions.
Gets worse than that. It is clear Wall Street loves her:
Clients assert that in light of he years as the U.S. Attorney for the Southern District of New York, she ‘stands alone’ for her ‘phenomenal talent’ in white collar and commercial defense matters.
White represented Bank of America former CEO Ken Lewis in a civil fraud case. She served on the NASDAQ board including the Executive, Audit and Policy Committee. Think about that for the rise of high frequency flash trading. She also had JPMorgan Chase as a client and fended off civil suits surrounding the financial crisis. Most telling JPMorgan CEO Jamie Dimon is thrilled with the nomination:
I have met Mary Jo White, and anyone who knows her at all - extremely capable, competent, bright, tough, and a perfect choice.
White represented Morgan Stanley and popped up in an SEC investigation::
An October 2008 report by the SEC's inspector general criticized the agency's enforcement chief at the time, Linda Thomsen, for providing "relevant information" to White in June 2005 about evidence the SEC had gathered as part of an insider-trading investigation involving John Mack, Morgan Stanley's CEO. White had been retained by Morgan Stanley's board to help vet Mack for the top job, which he got that year. Discussing e-mails supplied by Morgan Stanley, Thomsen told White the evidence showed there was "smoke there," but "surely no fire," according to the inspector general's report. "Learning the extent of the information the commission had against a potential target could prove very useful in preparing a defense," the report said. "The information was provided specifically because John Mack was being considered for a high-level position in a large investment bank and would not be available to another potential target of lesser means or reputation." The following year, the SEC fired the staff attorney who had been conducting the Mack investigation, Gary Aguirre. The agency in 2010 agreed to pay him $755,000 to settle a wrongful-termination lawsuit. Aguirre claimed the SEC retaliated against him after he complained that his superiors wouldn't let him interview Mack. (An SEC administrative-law judge in November 2008 rejected the inspector general's recommendation that the regulator consider disciplining Thomsen and two other SEC attorneys.) There was never any suggestion that White did anything improper on behalf of Morgan Stanley. She was pursuing her client's interests and digging for information.
White's husband represents clients who would come before the SEC and is lobbying heavily against regulations. From the Wall Street Journal:
Mr. White, a former top SEC official, is co-head of the group at law firm Cravath, Swaine & Moore LLP that advises companies on their public reporting obligations and corporate governance—central SEC issues.
Neil Barfosky, one of the most outspoken critics on financial reform praised the nomination, which maybe a sliver of hope White really switches sides.
I expect that she will be unfazed by the intimidation tactics of the usual suspects in Washington - be they antagonistic members of Congress, captured officials from other parts of government or those who so relentlessly push the agendas of the largest banks.
Yet representing Wall Street for a decade and during the financial crisis sounds like a fox in the hen house. The never ending revolving door between government and Wall Street is alive and well. While one could switch gears from being a top notch defense attorney to enforcing SEC regulations, that hasn't been generally the case for the Wall Street revolving door. Philosophy hints do not bode well either.
In February 2012, White expressed doubts at a panel at New York University about whether banks had committed crimes ahead of the financial crisis. She warned against trying to prosecute "mistaken behavior, what is even reckless risk-taking."
Obama kept Richard Cordray as head of the Consumer Financial Protection Bureau. We've seen how well that's going with record student loan debt. That said, Cordray is one of the few Populist bright spots in a sea of Wall Street to White House nominations and appointments.